HG 


tirm 


UC-NRLF 


LIBRARY 


UNIVERSITY  OF  CALIFORNIA, 


RECEIVED    BY    EXCHANGE 


Class 


SALARY  LOAN  BUSINESS 
IN  NEW  YORK  CITY 


By 
CLARENCE  W.  WASSAM,  AM 


Submitted  in  partial  fulfillment  of  the  requirements 
for  the  Degree  of  Doctor  of  Philosophy 

in  the 

Faculty  of  Political  Science 
Columbia  University 


NEW  YORK 
1908 


SALARY   LOAN   BUSINESS 

IN 
NEW  YORK  CITY 


SALARY  LOAN  BUSINESS 
IN  NEW  YORK  CITY 


By 
CLARENCE  W.  WASSAM,  A.M. 


Submitted  in  partial  fulfillment  of  the  requirements 
for  the  Degree  of  Doctor  of  Philosophy 

in  the 

Faculty  of  Political  Science 
Columbia  University 


UNiV 

OF 


NEW  YORK 
1908 


/ 


Copyright,  1908 

By  the  Charity  Organization  Society 
of  the  City  of  New  York 


TABLE  OF  CONTENTS. 
CHAPTER  I. 

PAGE. 

INTRODUCTION.  1 1 


ERRATA. 

Page  34,  line  2,  "  seven  offices  "  should 
read,  "  six  offices." 

Page  82,  line  6,  "$14.49"  should  read, 
"$13.49."  14 

Page  64,  "  H.  C.  Courtwright  "  should 
read,  "  H.  A.  Courtright." 


REASONS  FOR  THE  TRANSACTION.  18 

Assumed  motives  of  the  loan  companies.  Real  motive.  Rea- 
sons for  the  loan  on  the  part  of  the  borrower:  (i)  Economic 
condition  of  the  ordinary  laboring  man;  (2)  Sickness  or  death 
in  the  home;  (3)  Rental  in  advance  and  moving  expenses;  (4) 
To  avoid  buying  on  credit  or  on  the  installment  plan;  (5)  Finan- 
cial obligations;  (6)  Presents  to  friends;  (7)  Gambling.  Eco- 
nomic basis  of  the  salary  loan  company. 


183480 


TABLE  OF  CONTENTS. 
CHAPTER  I. 

PAGE. 

INTRODUCTION.  n 

Necessity  of  borrowing.  Difference  in  the  treatment  of  the 
man  who  borrows  a  large  amount  and  the  man  who  borrows  a 
small  amount.  Rate  of  interest  necessary.  General  opinion 
of  any  charge  greater  than  the  legal  rate.  Development  of 
the  salary  loan  business. 

CHAPTER  II. 
THE   TRANSACTION.  14 

Definition  of  a  Salary  Loan.  Nature  of  security  given.  Re- 
lation of  the  employer  to  the  transaction.  Documents  signed. 
Illustrations. 

CHAPTER  III. 
REASONS  FOR  THE  TRANSACTION.  18 

Assumed  motives  of  the  loan  companies.  Real  motive.  Rea- 
sons for  the  loan  on  the  part  of  the  borrower:  (i)  Economic 
condition  of  the  ordinary  laboring  man;  (2)  Sickness  or  death 
in  the  home;  (3)  Rental  in  advance  and  moving  expenses;  (4) 
To  avoid  buying  on  credit  or  on  the  installment  plan;  (5)  Finan- 
cial obligations;  (6)  Presents  to  friends;  (7)  Gambling.  Eco- 
nomic basis  of  the  salary  loan  company. 


183480 


8  SALARY  LOAN  BUSINESS  IN  NEW  YORK  CITY. 

CHAPTER  IV. 

PAGE. 

VOLUME    OF    BUSINESS    AND    CAPITAL    EMPLOYED    IN    NEW 

YORK  CITY.  22 

Exact  knowledge  impossible.  Amount  spent  for  advertis- 
ing. Estimate  based  upon  opinions  of  owners  and  managers  of 
offices.  Probable  number  of  persons  involved. 

CHAPTER  V. 

CHARGES.  28 

Necessity  of  a  higher  rate  of  interest  than  the  ordinary  legal 
rate.  Basis  of  interest  charge.  Reasons  for  a  higher  charge: 
(a)  Uncertainty  of  position ;  (b)  Collection  of  wages ;  (c)  Dif- 
ferent assignments  of  wages  at  the  same  time;  (d)  Amount  of 
loan;  (e)  Lack  of  legal  protection ;  (f)  Danger  of  court  expense. 
Charges  of  different  companies.  Extra  charges. 

CHAPTER  VI. 
EXPENSE  OF  THE  TRANSACTION  AND  ESTIMATED  PROFITS.  40 

Impossibility  of  securing  the  exact  expense.  Estimates  for 
a  typical  salary  loan  office:  (a)  Amount  of  capital  invested;  (b) 
Annual  operating  expense.  Indications  of  the  profit  in  the  salary 
loan  business. 

CHAPTER  VII. 
BUSINESS  METHODS  Now  EMPLOYED.  43 

Newspaper  advertising.  Personal  letters  and  circulars. 
Work  of  the  "Solicitor."  Commsision  to  borrowers.  Classes 
of  loan  offices  in  New  York  City.  Treatment  of  borrower  by 
the  brokers  of  H.  A.  Courtright:  (a)  Papers  signed;  (b)  En- 
dorsement secured;  (c)  Method  of  payment;  (d)  Work  of  at- 
torney; (e)  Nature  of  notes  signed  by  attorney;  (f)  Addi- 
tional charges  for  delinquent  payments.  Methods  of  business  of 


TABLE  OF   CONTENTS.  9 

PAGE. 

the  Coast  Cities  Collection  Company.  Business  methods  of  other 
companies.  The  managers  of  the  offices.  Real  owners  of  the 
different  offices.  Papers  signed  by  borrower:  (a)  Application 
Blank;  (b)  Power  of  Attorney;  (c)  Bill  of  Sale  of  Salary. 
Method  of  securing  signature.  Attitude  of  loan  company 
toward  interference  of  third  party:  (a)  When  a  friend;  (b) 
When  an  attorney;  (c)  When  the  employer.  Connection  be- 
tween the  different  companies.  Need  of  a  closer  co-operation. 

CHAPTER  VIII. 
LOAN  COMPANIES  AND  THE  LAW.  70 

Tabulation  of  the  laws  of  the  different  states.  Police  regu- 
ulations  of  Boston.  Law  governing  the  loan  business  in  New 
York  City.  Judicial  interpretation.  Evasions  of  the  law.  Cases 
in  which  the  court  held  in  favor  of  the  borrower. 

CHAPTER  IX. 
EFFECTS  OF  THE   LOAN   COMPANIES.  79 

Effect  upon  the  employer.  Attitude  of  employer  toward  the 
loan  business.  Influence  upon  the  home.  Effect  upon  the  indi- 
vidual; decreased  efficiency,  worry,  and  crime.  Effect  upon 
the  community. 

CHAPTER  X. 
PROPOSED  REMEDIES.  87 

Co-operation  of  employers.  Regulation  of  the  advertising  of 
loan  companies.  Co-operation  of  Post-office  Department.  Pub- 
licity. Establishment  of  a  loan  office  which  would  charge  rea- 
sonable rates  and  only  loan  to  those  in  actual  need.  Control  by 
legislation.  Proposed  law  for  the  State  of  New  York. 


APPENDICES. 

PAGE. 

Appendix  I. — Application  Blank 93 

Appendix  II. — Power  of  Attorney  used  by  A.  W.  Connable        96 

Appendix  III. — Power  of  Attorney  used  by  H.  A.  Court- 
right  97 

Appendix  IV. — Continuing  Power  of  Attorney  used  by 

H.  A.  Courtright 101 

Appendix  V. — Power  of  Attorney  used  by  D.  H.  Tolman.       102 
Appendix  VI. — Agreement  of  Guaranty  used  by  Federal 

Discount  Company 104 

Appendix  VII. — Bill  of  Sale  used   by    Federal   Discount 

Company 106 

Appendix  VIII. — Bill  of  Sale  used  by  A.  W.  Connable. . .       107 

Appendix  IX. — Assignment  filed  upon  employer  used  by 

A.  W.  Connable 108 

Appendix  X. — Copy  of  assignment  filed  upon  employer 

used  by  H.  A.  Courtright no 

Appendix  XL — Notice  sent  to  employer  by  Federal  Dis- 
count Company 112 

Appendix  XII. — Protest  sent  to  borrower  by  H.  A.  Court- 
right  113 

Appendix  XIII. — Note  used  by  H.  A.  Courtright 113 

Appendix  XIV. — Memorandum  sent  to  borrower  by  H.  A. 

Courtright    114 

Appendix  XV. — Maryland  Law  of  1906 115 

Appendix  XVI. — Virginia  Law  of  1906 117 

Appendix  XVII. — New  York  Law  of  1904 120 

Appendix  XVIII. — Massachusetts  Law  of  1906 120 

Appendix  XIX. — List  of  important  salary  loan  offices  in 

New  York  City 122 

Appendix  XX. — Proposed  Law  for  the  State  of  New  York       123 


I. 

INTRODUCTION. 

The  necessity  of  borrowing  money  for  a  short  period  of  time 
is  as  old  as  the  money  economy  under  which  it  arises.  It  is 
common  to  the  man  of  large  and  of  small  means,  to  the  entre- 
preneur in  business  and  to  the  man  who  works  for  a  daily  wage. 
Very  few  successful  men  could  have  attained  their  present  posi- 
tion had  it  not  been  possible  for  them  to  secure  loans  in  time  of 
temporary  need.  Business  experience  furnishes  innumerable 
illustrations  of  financial  ruin  because  of  inability  to  secure  short 
time  loans.  It  is  not  contended  that  borrowing  should  be 
encouraged,  nor  that  the  secret  of  success  is  found  in  the  ability 
to  secure  a  loan  in  time  of  need,  but  it  is  a  fact  that  judicious  bor- 
rowing is  frequently  an  absolute  necessity. 

Shakespeare  has  immortalized  the  man  who  takes  an  un- 
natural advantage  of  another's  necessity  to  secure  an  unreason- 
able demand.  In  all  ages  it  has  been  the  man  least  able  to 
pay  the  high  rate  and  least  able  to  protect  himself  who  has 
been  the  object  of  the  usurer.  Such  is  the  case  at  the  pres- 
ent time.  The  business  man  when  he  secures  a  loan  from  his 
bank  finds  that  the  strong  arm  of  the  law  has  so  regulated 
the  banking  business  that  the  borrower  is  reasonably  well 
protected.  He  also  finds  that  there  is  no  special  disgrace  con- 
nected with  a  loan  secured  by  a  mortgage  on  his  real  estate  or 
on  his  business.  His  friends  consider  that  he  is  speculating  and 
is  prosperous.  The  maxim  that  "One  never  becomes  rich  until 
he  is  in  debt"  is  considered  sound  in  the  business  world.  A  very 
different  condition  of  affairs  exists  when  a  man  is  compelled  to 


12  SALARY  LOAN  BUSINESS  IN  NEW  YORK  CITY. 

borrow  money  for  purposes  of  consumption.  There  is  a  reason 
for  this  difference.  The  one  man  used  the  money  he  borrowed 
as  an  investment,  while  the  other  man  borrowed  as  a  last  resort 
to  maintain  his  economic  independence. 

The  man  who  loans  money  to  the  latter  type  of  borrower  is 
very  likely  to  be  considered  cruel  and  unreasonable  if  he  attempts 
to  collect  his  debt  when  the  borrower  is  unable  to  pay.  The  very 
fact  that  it  is  necessary  for  an  individual  to  borrow  to  meet  living 
expenses  is  evidence  that  it  will  be  difficult  for  him  to  meet 
his  obligations.  This  condition  of  affairs  naturally  increases  the 
risk  of  the  loan,  for  which  there  should  be  a  reasonable  return. 
The  position  of  the  borrower  is  uncertain  and  the  amount  of  the 
loan  is  small,  and  both  of  these  considerations  require  a  higher 
rate  of  interest.  It  is  therefore  evident  that  in  order  to  conduct 
a  business  in  which  a  small  loan  is  made  to  salaried  employees 
secured  by  an  assignment  of  wages,  it  is  necessary  to  charge  a 
higher  rate  of  interest  than  the  ordinary  legal  one.  These  facts 
are  often  overlooked  by  the  ordinary  individual  and  when  a 
money  lender  charges  more  than  the  legal  rate  he  is  imme- 
diately marked  as  a  usurer.  This  popular  opinion  is  reflected 
in  the  laws  of  the  several  states,  practically  all  of  which  provide 
for  a  general  usury  law,  but  very  few  make  any  exception  as  to 
the  amount  of  the  loan  or  the  nature  of  the  security  offered.  The 
bill  recently  introduced  in  the  House  of  Representatives  at 
Albany  by  Representative  Herrick  from  the  Borough  of  Man- 
hattan, New  York  City,  is  a  good  illustration  of  this  type  of  leg- 
islation. It  provides  that  to  charge  more  than  6  per  cent  per 
annum  upon  small  loans  secured  by  salary  or  household  fur- 
niture shall  be  a  misdemeanor. 

The  presence  of  a  very  definite  economic  need,  and  the  ab- 
sence of  legislative  protection  to  any  organization  which  would 
legitimately  fill  such  a  need,  has  resulted  in  the  development  of 
the  salary  money  lenders,  commonly  known  as  "loan  sharks." 
Their  operations  are  very  extensive  and  they  do  a  large  busi- 
ness in  practically  all  of  the  important  cities  of  the  United  States. 
They  either  openly  ignore  the  law  or  evade  the  spirit  of  it  by 
some  scheme  of  administration  cleverly  devised  and  charge  a  rate 


INTRODUCTION.  13 

of  interest  which  is  believed  to  be  not  only  sufficient  to  pay  for 
the  additional  risk  which  they  take,  but  adequate  to  secure  enor- 
mous profits  for  those  engaged  in  the  business. 

It  is  the  purpose  of  this  study  to  describe  the  salary  loan  busi- 
ness as  it  is  conducted  in  New  York  City  at  the  present  time. 
The  facts  presented  in  the  subject  matter  have  been  obtained 
through  personal  acquaintance  with  employees  who  have  had 
loans  with  the  different  companies  and  personal  interviews  with 
owners,  managers  and  collectors  of  different  offices. 

Facts  are  at  hand  concerning  one  hundred  and  thirty-two  dif- 
ferent employees  who  have  had  loans  with  different  companies. 
The  managers  of  twelve  different  offices  were  interviewed  con- 
cerning the  methods  used  in  their  business.  Since  several  of  the 
managers  consulted  were  in  charge  of  offices  which  had  branches 
under  different  names,  the  number  interviewed  shows  the  busi- 
ness method  of  twenty  of  the  most  prominent  offices  in  the  city. 
The  relation  between  the  writer  and  the  owner  of  two  large 
offices  and  the  managers  of  five  important  offices  was  such  that 
a  considerable  amount  of  information  from  their  point  of  view 
was  secured. 


II. 

THE  TRANSACTION. 

A  loan  on  salary  is  the  advance  of  money  by  an  individual  or 
corporation  to  a  salaried  employee.  The  security  given  by  the 
employee  who  obtains  the  money  is  an  assignment  of  his  wages 
due  or  to  become  due.  This  transaction  has  been  called  a  loan 
without  security,  which  in  reality  it  is.  In  practice,  however, 
in  the  majority  of  cases  the  lender  is  in  a  secure  position;  he 
loans  only  to  individuals  who  have  steady  employment,  and  whose 
employers  will  recognize  an  assignment.  The  loans  are  of 
small  amount,  varying  from  $10  to  $35,  and  the  borrower  must 
have  a  weekly  wage  sufficient  to  pay  the  full  amount  in  case 
the  company  is  required  to  pay  the  lender.  The  attitude  of 
different  employers  toward  the  assignment  of  the  wages  of  their 
employees  is  a  matter  of  careful  record  on  the  part  of  the  salary 
money  lenders.  If  an  employer  will  discharge  a  man  when  it  is 
known  to  him  that  he  has  assigned  his  salary,  the  employees  of 
this  firm  are  considered  good  risks.  It  may  appear  to  be  a  con- 
tradiction of  terms,  that  a  man  in  danger  of  losing  his  position 
will  be  a  better  risk  than  one  who  is  not  in  such  danger,  but  the 
explanation  is  simple.  One  of  the  chief  points  which  all  loan 
companies  emphasize  is  that  the  transaction  will  be  perfectly  con- 
fidential and  that  the  employer  shall  never  know  of  the  assign- 
ment. When  the  employee  has  broken  the  rule  of  the  company 
and  made  the  assignment  of  his  wages,  then  it  is  that  the  loan 
company  threatens  to  notify  the  employer,  and  rather  than  lose 
a  good  position  the  employee  will  pay  the  charges  demanded  by 
the  loan  company.  From  a  legal  point  of  view  this  threat  is  of 
little  value,  but  in  practice  it  is  most  effective. 


THE   TRANSACTION.  15 

The  loan  companies  do  not  rely  entirely  upon  intimidation  and 
fear  in  the  collection  of  their  money.  They  require  the  bor- 
rower to  sign  a  bill  of  sale  of  his  salary  or  authorize  an  attor- 
ney to  do  the  same  for  him.  In  case  the  matter  is  brought  before 
a  court  it  is  contended  by  the  loan  company  that  the  transaction 
is  not  a  loan  of  money  but  a  purchase  of  salary,  like  the  pur- 
chase of  any  other  commodity;  and  since  the  transaction  is  one 
of  purchase  and  sale  there  can  be  no  claim  of  usury.  In  the 
majority  of  cases  the  loan  company  demands  in  addition  to  the 
assignment  of  the  salary  of  the  borrower  the  assignment  of  the 
wages  of  from  one  to  three  other  employees.  These  assignments 
become  effective  if  the  borrower  fails  to  meet  his  obligations. 

A  few  illustrations  will  aid  in  the  understanding  of  the  trans- 
action. A  salaried  man  is  in  need  of  money.  He  has  a  good 
position  and  receives  fair  wages,  but  an  emergency  arises  in 
which  his  income  will  not  meet  the  demands  made  upon  him  and 
he  is  compelled  to  secure  a  small  loan.  Hje  calls  at  a  loan  brok- 
er's office  and  applies  for  a  loan.  If  his  references  are  good  and 
the  firm  by  which  he  is  employed  has  a  rule  prohibiting  any  em- 
ployee from  making  an  assignment  of  his  wages  under  penalty 
of  discharge,  the  money  is  secured  without  difficulty.  The  nec- 
essary papers  are  signed,  by  which  he  agrees  to  pay  a  certain 
amount  each  week  until  the  debt  is  canceled.  If  he  meets  the 
payments  promptly  the  transaction  is  closed;  the  borrower  re- 
ceives a  receipt  in  full  and  his  signature  from  the  papers  signed ; 
and  the  documents  themselves  are  destroyed.  In  case  of  failure 
to  meet  a  payment  when  due,  he  is  at  once  notified  that  his  part 
of  the  agreement  has  not  been  fulfilled,  that  the  promise  of  se- 
crecy is  no  longer  binding  and  unless  the  matter  is  settled  at  once 
his  employer  will  be  notified.  The  danger  of  losing  a  good  posi- 
tion is  generally  sufficient  to  force  the  payment  of  whatever  the 
loan  company  demands.  When  the  borrower  is  employed  by  a 
private  concern  whose  attitude  toward  an  assignment  of  the 
wages  of  an  employee  is  unknown,  or  when  the  loan  company  for 
any  reason  questions  the  security  offered  by  the  borrower,  from 
one  to  three  endorsers  are  required  as  additional  security. 
Should  the  investigation  of  the  applicant  and  the  endorsers  prove 


l6  SALARY  LOAN  BUSINESS  IN  NEW  YORK  CITY. 

favorable  the  money  is  advanced.  In  this  way  the  wages  of 
several  different  employees  become  surety  for  the  loan. 

If  for  any  reason  the  borrower  defaults  in  his  payments  a 
notice  of  assignment  is  filed  upon  the  employer  of  each  of  the 
assignees,  at  the  same  time  and  for  the  same  amount.  In  one 
of  the  cases  investigated  the  borrower  was  discharged  by  his  em- 
ployer before  his  obligation  was  fully  met,  causing  a  default  in 
payment.  The  employer  of  the  first  endorser  refused  to  recog- 
nize the  file.  He  considered  the  debt  unjust  and  was  desirous  of 
protecting  his  employee.  Therefore  when  the  representative  of 
the  loan  company  called  he  informed  him  that  the  man  was  no 
longer  in  his  employ.  The  employer  of  the  second  endorser 
recognized  the  file  and  withheld  the  employee's  wages.  The  loan 
company  then  demanded  the  entire  amount  with  additional 
charges,  (a)  before  the  file  would  be  released,  although  the  origi- 
nal contract  stipulated  that  payments  should  be  made  weekly.  The 
most  unfortunate  part  of  the  situation  was  that  the  employer  not 
only  withheld  the  amount  necessary  to  satisfy  the  loan  but  the  en- 
tire amount  of  his  wages  until  the  release  was  secured.  It  was 
with  the  utmost  difficulty  that  the  amount  necessary  to  pay  the 
exorbitant  rates  charged  by  the  loan  company  was  secured  and  the 
release  obtained. 

The  transaction  is  of  a  slightly  different  character  when  the 
borrower  applies  to  one  of  the  brokers  (b)  of  H.  A.  Courtright 
of  Providence,  R.  I.  In  a  case  recently  investigated  the  borrower 
made  his  application  in  the  office  of  Howard,  73  West  Eleventh 
street.  The  necessary  papers  were  signed  and  one  dollar 
commission  was  paid  the  broker  for  his  services  in  securing  the 
loan.  The  broker  agreed  to  return  the  commission  in  case  the 
loan  was  not  secured.  The  next  day  the  applicant  received  a 
check  dated  at  Providence,  R.  I.,  and  signed  by  H.  A.  Court- 
right,  for  the  amount  of  the  loan.  Enclosed  with  the  check  was  a 
statement  to  the  effect  that  the  said  H.  A.  Courtright  had  pur- 
chased several  notes  signed  by  the  borrower  and  that  they  were 
payable  at  Providence,  R.  I.  The  amount  of  each  note  and  the 

(a)  See  page  37  et  seg. 

(b)  Howard,  Chesterklrk,  Graham. 


THE   TRANSACTION.  I/ 

date  of  payment  were  also  included.  Several  payments  had  been 
made  by  money  order  when  one  was  delayed.  The  morning  fol- 
lowing the  date  when  the  delinquent  payment  was  due  the  bor- 
rower received  a  letter  from  the  Coast  Cities  Collection  Company, 
notifying  him  that  the  payment  had  not  been  made  when  due  and 
informing  him  that  as  a  result  there  was  now  due,  in  addition  to 
the  regular  payment,  a  protest  fee  and  a  collection  fee,  all  of 
which  must  be  paid  at  once  or  his  employer  would  be  notified  to 
withhold  his  salary.  The  Coast  Cities  Collection  Company  is 
ostensibly  an  independent  concern  which  is  employed  by  H.  A. 
Courtright  to  collect  his  notes  in  New  York  City.  In  this  par- 
ticular case  the  borrower  was  without  collateral  to  secure  a  loan 
or  friends  able  to  advance  him  the  desired  amount.  He  was 
therefore  forced  to  go  to  another  loan  company  and  assign  his 
wages  again  in  order  to  secure  the  amount  necessary  to  pay  the 
loan  and  to  secure  the  release  of  his  wages. 


.  .          III. 

REASONS  FOR  THE  TRANSACTION. 

A  distinctly  philanthropic  air  is  assumed  by  some  of  the  own- 
ers of  salary  loan  offices  in  New  York  City.  Their  speech  and 
attitude  are  designed  to  inspire  the  belief  that  their  motives  are 
altruistic ;  that  their  offices  have  been  opened  primarily  to  aid  the 
poor ;  and  that  any  charge  for  their  services  would  be  a  gross  vio- 
lation of  their  ethical  code.  The  advertisements  in  the  daily 
press  and  the  circulars  sent  out  by  the  different  offices  are  of  the 
same  tenor.  One  of  the  most  appealing  expressions  of  this  phil- 
anthropic spirit  is  contained  in  a  circular  (a)  sent  to  an  employee 
of  the  Interborough  Rapid  Transit  Company  from  the  office  of 
Walter  Graham,  150  Nassau  Street:  "In  case  you  haven't  all  the 
money  you  need,  ...  I  can  be  of  service  to  you.  I  can  save 
you  time,  trouble,  annoyance  and  expense.  If  you  have  a  loan 
from  another  company  and  are  in  trouble  come  and  see  me.  I 
will  pay  it  for  you." 

Acting  upon  a  similar  offer  contained  in  another  advertise- 
ment, an  employee  obtained  a  loan  of  $13.25,  for  which  he  paid 
$25.48  in  six  weeks.  At  the  end  of  this  time  his  failure  to  meet 
a  payment  promptly  resulted  in  a  file  upon  his  wages  which  cost 
him  his  position. 

The  real  motive  of  the  loan  company  is  not  philanthropy  but 
profit,  and  every  effort  is  used  to  secure  the  largest  returns  pos- 
sible. The  motive  is  legitimate.  The  loan  broker  performs 
a  service  for  which  he  has  a  right  to  demand  adequate  re- 
muneration. The  stockholders  of  banks  and  similar  organiza- 
tions are  not  criticized  for  charges  necessary  to  realize  a  fair 

(a)  See  page  49. 


REASONS  FOR  THE  TRANSACTION.  19 

return  on  the  capital  invested.  The  grocer,  the  merchant  and 
the  tailor  all  receive,  and  justly  so,  a  fair  return  for  their  labor. 
It  is  only  when  need  or  weakness  is  exploited  that  adverse 
criticism  arises. 

The  borrower,  on  the  other  hand,  is  led  to  the  door  of  the 
salary  loan  broker  by  a  feeling  of  need,  either  real  or  imaginary. 
As  a  rule  the  occasion  is  a  temporary  emergency  which  cannot  be 
met  from  regular  income.  The  cause  of  his  disability  may  be 
the  resultant  of  any  or  all  of  those  economic  forces  which  sur- 
round the  ordinary  laboring  man  in  New  York  City. 

The  Committee  (a)  on  the  Standard  of  Living  appointed  by 
the  State  Conference  of  Charities  and  Correction  of  the  State  of 
New  York  as  a  result  of  its  investigation  found  that  a  consider- 
able proportion  of  the  families  studied  in  Greater  New  York 
were  not  receiving  a  sufficient  wage  to  maintain  a  reasonable 
standard  of  living.  It  is  a  regrettable  fact  that  a  very  large 
proportion  of  the  families  of  laboring  men  in  the  city  spend 
their  entire  income  on  what  appear  to  be  the  bare  necessities 
of  life.  In  the  presence  of  any  unusual  expenditure  they  are 
utterly  helpless,  unless  a  loan  is  secured  which  may  be  repaid  in 
small  installments. 

In  the  cases  investigated  for  the  present  study  there 
were  a  number  of  different  circumstances  which  had 
brought  unusual  expense  upon  the  family  and  compelled 
them  to  seek  a  small  loan.  Sickness  or  death  in  the  home 
is  perhaps  the  most  common  cause  of  temporary  need.  The 
experience  of  a  young  man  in  the  employ  of  the  New  York 
Central  Railroad  is  an  illustration.  His  mother  had  been  ill  for 
some  time  and  the  attending  physician  had  prescribed  a  trip  to 
the  country  as  the  only  means  of  recovery.  The  son's  salary 
had  been  sufficient  to  meet  the  ordinary  expenses  of  the  home, 
but  this  added  burden  was  unprovided  for.  As  there  was  no 
other  source  from  which  the  son  could  secure  the  money  he  went 
to  a  loan  broker,  who  furnished  him  the  necessary  amount.  It 
was  repaid  in  small  weekly  payments,  the  assignment  of  his  sal- 

(a)  See  Report  of  Committee  on  the  Standard  of  Living.  New  York  State 
Conference  of  Charities  and  Correction — Proceedings,  1907. 


20  SALARY  LOAN  BUSINESS  IN   NEW  YORK   CITY. 

ary  serving  as  security.  In  another  case  the  death  of  a  man's 
wife  from  tuberculosis  was  the  occasion  which  made  necessary 
a  loan  secured  by  the  assignment  of  his  wages. 

A  similar  drain  upon  the  resources  of  the  marginal  laborer 
is  the  custom  of  demanding  rental  in  advance.  This,  coupled 
with  the  expense  of  moving  when  for  any  reason  new  quarters 
are  required,  frequently  exceeds  the  savings  of  a  household,  mak- 
ing an  advance  from  some  source  a  necessity.  A  man  who  had 
been  out  of  employment  for  some  time,  found  that  when  he  had 
secured  a  position  his  landlord  raised  the  rent  to  an  amount  which 
was  beyond  his  ability  to  pay,  and  he  was  forced  to  seek  cheaper 
quarters.  A  suitable  apartment  within  his  means  was  found,  but 
to  secure  the  advantage  of  the  change,  it  was  necessary  to  have  a 
sufficient  amount  of  cash  to  pay  both  the  rent  a  month  in  advance 
and  the  cost  of  moving.  He  could  not  raise  the  amount,  as  the 
high  rent  he  was  already  paying,  with  his  small  salary,  made 
saving  impossible.  A  small  loan  was  sought  which  could  be 
repaid  in  small  weekly  payments.  An  assignment  of  his  wages 
and  a  mortgage  upon  his  household  furniture  was  offered  as 
security.  In  spite  of  a  very  extended  search  for  over  two  months, 
he  was  unable  to  find  a  place  where  he  could  secure  the  desired 
loan,  except  from  the  loan  brokers,  who  charge  such  an  exorbi- 
tant rate  of  interest  that  it  was  hopeless  for  him  to  attempt  to 
pay  it.  The  experience  of  this  man  is  believed  to  be  typical  of  a 
large  number  of  individuals  in  New  York  City. 

A  young  man  who  has  an  extensive  acquaintance  in  the 
city  reports  that  it  is  a  common  practice  among  clerks 
and  young  employees  to  borrow  a  small  amount  of  money  when 
in  need  of  a  suit  of  clothes  or  anything  which  requires  an  un- 
usual expenditure,  their  reason  for  doing  so  being  that  they  con- 
sider it  more  advantageous  to  borrow  the  money  and  repay  it  in 
small  weekly  payments  than  to  buy  either  on  credit  or  on  the 
installment  plan.  Life  insurance  premiums,  interest  on  mort- 
gages and  similar  obligations,  Christmas  and  birthday  presents 
are  some  of  the  less  frequent  but  still  not  uncommon  objects  for 
which  money  is  secured  from  the  loan  brokers.  An  enumera- 
tion of  the  causes  which  lead  men  to  borrow  money  would  not  be 


REASONS  FOR  THE  TRANSACTION.  21 

complete  if  it  failed  to  mention  gambling.  The  temptation  to 
gamble  is  especially  strong  if  a  debt  is  owed  which  it  is  impossible 
to  meet  from  current  income  or  other  available  resources.  In 
such  cases  small  loans  are  obtained  in  the  hope  that  the  proper 
turn  of  a  card  or  selection  in  a  race  will  result  in  a  sum  necessary 
to  cancel  the  entire  debt. 

It  is  the  opinion  of  a  prominent  money  lender  in  the  city  that 
about  seventy-five  per  cent  of  the  individuals  who  borrow  from 
loan  companies  are  men  with  families  who  are  temporarily  in 
need  and  are  helped  out  of  difficulty  by  a  loan,  and  that  twenty- 
five  per  cent  are  men  who  could  get  along  better  without 
the  money,  as  it  is  spent  in  gambling,  intemperance  and  vice.  The 
managers  of  five  different  loan  offices  expressed  the  opinion  that 
a  majority  of  persons  who  patronize  their  offices  are  men  with 
families  who  are  honest  and  industrious,  but  who  have  met  some 
temporary  emergency  which  the  loan  helped  them  to  overcome. 

Undoubtedly  a  large  number  of  the  men  borrow  because  of 
a  temporary  need,  and  by  repaying  the  loan  in  small  weekly  in- 
stallments are  soon  out  of  debt.  The  service  rendered  by  the 
loan  company  in  such  cases  is  of  great  importance.  The  family 
is  thereby  spared  the  humiliation  of  seeking  aid  from  friends  or 
from  charity,  the  temporary  emergency  is  overcome,  the  family 
is  again  self-supporting,  and  through  it  all  the  community  has 
not  been  called  upon  for  assistance. 

It  is  evident,  therefore,  that  under  present  conditions  in  New 
York  City  there  is  a  very  definite  economic  basis  for  organiza- 
tions which  advance  money  in  small  sums  to  salaried  employees, 
secured  by  the  only  collateral  which  they  possess,  viz.,  an  assign- 
ment of  their  wages.  The  evils  in  the  present  system  should  be 
remedied,  the  poor  who  are  compelled  to  borrow  in  time  of  need 
should  be  protected  from  the  unjust  charges  of  the  money  lender, 
but  care  should  be  taken  not  to  destroy  the  present  system  until 
something  better  has  been  developed  to  take  its  place. 


IV. 


VOLUME  OF  BUSINESS  AND  CAPITAL  EMPLOYED 
IN   NEW  YORK  CITY. 

An  examination  of  the  books  of  all  the  salary  loan  offices  in 
New  York  City  would  be  necessary  in  order  to  secure  an  accurate 
statement  of  either  the  amount  of  capital  employed  or  the  vol- 
ume of  business  transacted.  This,  at  the  present  time,  is  ob- 
viously impossible.  There  are  several  methods,  however,  of 
making  a  reasonably  satisfactory  estimate.  A  very  common  way 
of  estimating  the  extent  of  any  business  is  a  study  of  the  amount 
expended  for  advertising.  It  is  safe  to  conclude  that  no  com- 
pany will  spend  more  for  advertising  for  any  considerable  length 
of  time  than  its  business  will  warrant. 

The  table  on  page  23  gives  the  amount  spent  for  advertising 
in  the  leading  English  and  German  daily  papers  (a)  for  the 
weeks  ending  September  25,  October  9,  and  December  5,  1907. 

The  total  amount  expended  for  the  week  ending  September 
23  was  $686.28 ;  for  the  week  ending  October  9,  $688.01 ;  for  the 
week  ending  December  5,  $807.17.  The  average  weekly  cost  for 
the  three  weeks  was  $727.15.  Based  upon  this  average  the  sal- 
ary loan  companies  expend  annually  $37,811.80  for  newspaper 
advertisements.  This  is  only  a  portion  of  the  whole  amount,  as 
a  large  sum  is  expended  in  sending  out  personal  letters  and 

(a)  The  following  papers  were  consulted :  The  New  York  Herald,  The  New 
York  Times,  The  World  (morning  edition),  New  York  American,  New  Yorker 
Staats  Zeitung,  The  New  York  Press,  The  Sun  (morning  edition),  New  York 
Tribune,  The  Morning  Telegraph,  New  Yorker  Morgen-Journal,  New  York  Com- 
mercial, The  Journal  of  Commerce,  The  Wall  Street  Journal,  The  Brooklyn 
Daily  Eagle,  The  Daily  Standard  Union,  The  Brooklyn  Times,  The  Brooklyn  Citi- 
zen, The  New  York  Evening  Post,  The  Evening  Sun,  The  Evening  Mail,  The 
World  (evening  edition),  The  Evening  Telegram,  The  Glohe,  The  New  York 
Evening  Journal. 


VOLUME  OF  BUSINESS  AND  CAPITAL  EMPLOYED. 


lunnny  pa^.'Bnii^sjj 

CO 

1—  1 

9 

CO 

i 

§              CO              CO 

s     §     s 

^                 TH                 -rH 

« 

TH 

00 

<n 

1 

1-H 

** 

'^ 

1 

^l     M.       d. 

B 

c$ 

§ 

CO              CO              CO 

TH 

GO 

n 

TH             CO             CJ 

t- 

h 

,800  88M9AV 

s. 

t^ 

M    & 

senn  jo  J8qcanj^  92'BJ8Ay 

§ 

GO 

OS 
0 

i 

CJ              »O 

1 

o 

5n9/9jj^jJoAaP8qraTNJI^oX 

$ 

TH 

0 

TH 

^                       TH                       TH 

d 

w    w 

£  Q 

^SOQ 

T-I 

o 
o 

8 

o 

OS               o 
CJ              o 
CO              -t 

£ 

bo 

_ 

CO 

OS 

CJ 

w   P 

.5   o 

A^89Ai  r«4oli 

^ 

CJ 

a  55 

rQ     O 

H    < 

H    o' 

seaiT  jo 

| 

0 

0 

«>              0 

CJ 

r*H     r^\ 

•S    « 

7-H 

G3 

CO 

^ 

r?  « 

jaqmn^  woi 

CJ 

1-1 

^ 

0     H 
/^     CJ 

F 

SuispaaApy 

0 

o 

0 

T*                   1-H 

10 

3  O 

stnat^  jo  J9qum^ 

Ci 

1—1 

U4 

W     Ln 

CO 
CO 

GO 

o 

Tf                    1O                   O 

J^-               CO               GO 

0 

^     <N 

fcc 

Osoo 

Oi 

»o 

0 

OS 

0              T-              00 
CJ 

CT1 

s 

^     H 

••3  § 

«©• 

K,      fin 
$1 

H    ^ 

•g        4i 

S9aii  jo 

6 

§ 

CO 

os 

C^              Oi              Ol 

c^          oi          CQ 

T-H 

CJ 

CO 

f- 

^    0 

So 

co 

co  5 

2aispa9Apy 

l>                   TH                    0                   ^                    TH                    rH 
TH                       TH                        TH 

M 

p 

stnjj.j  jo  jgqron^i 

CJ 

yw 

o 

CO 

o 

CO 

^^                CO 

CJ 

co 

4      k^ 

CJ 

CO 

0              ^ 

o 

be  t^ 

^     Q_         Tt?ir*T 

TH 

OS 

CJ 

oo 

-^     •—  • 

a    o 

"•l-n  *•''•'  AY  I**T"JU 

CJ 

CO 

5  g 

i  s 

«5^ 

w  » 

J* 

S9uiq  jo 

2 

cS 

i 

o 

CJ              O 

TH                     i> 

CJ 

CO 

J" 

o   w 

S      rt 

1-1 

CO 

en    H 
H     ^ 

3aisi^j8Apv 
stnjy[  jo  jaqranx 

00 

i-H 

^ 

00 

-*     - 

CO 
<M 

«g 

§     ^ 

ADVERTISE 

I  §8 

55             23 

THE  WORLD 
(Morning  Edition 

THE  NEW  YORK 
AMERICAN 

M 

0 

\l 

K* 

c- 

W  ^       M 

Sa    §§    § 
S3    jxe    l«o 

63    C3                 Q                 -- 

PS     ^^     ^  2 

MM             M    ^             M    P? 

r*i   ^         .^   ^          ^   M 

gw     ^S     ^K 
HH     ||     | 

TOTAL 

24  SALARY  LOAN  BUSINESS  IN   NEW  YORK  CITY. 

printed  circulars.  Seventy-five  thousand  dollars  would  be  a  very 
conservative  estimate  of  the  total  amount  which  the  different 
companies  spend  annually  in  some  form  of  advertising.  This 
method  of  estimating  the  volume  of  business  is  somewhat  uncer- 
tain, but  if  $75,000  is  expended  annually  for  advertising  it  is 
evident  that  the  salary  loan  companies  are  doing  a  large  business. 
The  amount  spent  for  advertising  is  more  significant  when 
it  is  remembered  that  several  of  the  companies  do  no  advertising 
whatever,  and  others  carry  only  a  small  amount  compared  with 
the  extent  of  their  business.  The  latter  type  is  illustrated  by  the 
following  advertisement : 


EMPLOYEES  who  need  money,  appreciate 
absolute  privacy,  prompt  action,  address 
Box  284,  Madison  Square. 


A  gentleman  who  has  had  extensive  experience  with  differ- 
ent loan  companies  divulges  the  fact  that  the  answering  of  this 
advertisement  convinced  him  that  there  are  three  large  offices, 
each  of  which  is  doing  an  extensive  business,  all  known  to  the 
outside  world  as  "Box  284,  Madison  Square." 

An  estimate  of  the  amount  of  circulating  capital  employed  and 
the  annual  volume  of  business  done,  which  is  believed  to  approach 
accuracy,  is  based  upon  the  opinion  of  managers  of  different  loan 
offices  expressed  in  conversation  with  their  friends. 

Six  managers  and  the  owner  of  two  large  offices,  all  in  the 
City  of  New  York,  were  unanimous  in  the  belief  that  an  average 
of  about  $10,000  capital  is  employed  in  each  office.  Some  of  the 
offices  are  known  to  have  less  and  some  are  believed  to  have  more. 
The  same  individuals  agreed  that  the  average  office  has  from  800 
to  1,000  live  accounts.  The  average  loan  is  about  $20.00  and  the 
method  of  weekly  payments  makes  an  average  of  about  $10.00 
which  each  individual  has  of  the  capital  at  any  one  time.  Thus 
a  capital  of  $8,000  would  furnish  800  customers  with  a  loan  of 
$20  cash  to  be  repaid  in  weekly  payments.  A  capital  of  $10,000 
would  furnish  1,000  customers  with  the  same  amount.  Since 
the  loans  are  for  a  short  period,  it  is  possible  to  do  a  much  larger 
business  than  the  amount  of  capital  would  indicate.  If  the  loans 


VOLUME  OF  BUSINESS  AND  CAPITAL  EMPLOYED.  2$ 

were  made  for  an  average  of  twelve  weeks  the  capital  could  be 
loaned  at  least  four  times  during  the  year,  making  possible  a 
$40,000  business  on  a  circulating  capital  of  $10,000,  if  no  part 
of  the  accumulated  interest  were  added  to  the  capital.  The 
majority  of  the  loans,  however,  are  for  a  shorter  period,  which 
enables  the  manager  to  turn  over  his  capital  more  frequently, 
thereby  increasing  the  volume  of  business. 

The  opinion  of  a  man  who  has  been  very  closely  connected 
with  the  loan  business  for  the  past  ten  years,  who  has  studied  con- 
ditions in  several  of  the  large  cities  of  the  United  States  and  who 
has  himself  been  manager  of  a  loan  office  for  a  number  of  years, 
agrees  with  the  conclusions  which  have  been  stated  above.  He 
believes  the  very  nature  of  the  business  makes  the  handling  of 
more  than  one  thousand  active  accounts  in  one  office  unprofitable. 

It  is  extremely  difficult  to  ascertain  the  number  of  salary  loan 
offices  (a)  in  New  York  City.  Some  of  them  do  not  advertise 
and  some  advertise  under  different  names.  Thirty  different  of- 
fices, however,  are  known,  and  it  is  probable  that  the  whole  num- 
ber is  very  much  larger.  Based  upon  the  minimum  number  of 
offices  there  would  be  about  $300,000  capital  invested,  which 
would  make  possible  a  business  of  $1,200,000  annually,  if  the 
loans  were  made  for  an  average  of  twelve  weeks.  This  is  be- 
lieved to  be  a  very  conservative  estimate. 

The  number  of  persons  directly  influenced  by  the  loan  busi- 
ness includes  not  only  the  employee  but  his  family  as  well.  As- 
suming that  the  average  office  has  one  thousand  customers,  there 
would  be  thirty  thousand  employees  who  are  making  payments- 
every  pay  day,  to  the  loan  companies.  There  are  some  dupli- 
cates included  in  this  number,  but  they  are  more  than  overbal- 
anced by  the  conservative  estimate  of  the  number  of  offices. 
Inasmuch  as  a  large  majority  of  those  who  borrow  are  married 
men  with  families,  it  is  reasonable  to  conclude  that  at  least  one 
hundred  thousand  individuals  in  New  York  City  are  directly  af- 
fected by  the  salary  loan  business.  A  considerable  number  of 
individuals  who  are  in  a  position  to  judge  believe  that  the  extent 

(a)  For  a  list  of  the  most  important  offices  In  the  city  with  their  addresses 
see  Appendix  XIX,  page  122. 


26  SALARY  LOAN  BUSINESS  IN  NEW  YORK  CITY. 

of  the  business  in  New  York  City  is  larger  than  the  preceding  fig- 
ures would  indicate.  An  employee  of  the  largest  transportation 
company  in  the  city  believes  that  at  least  90  per  cent  of  his  fellow 
employees  have  loans  secured  by  an  assignment  of  their  wages. 
Another  employee  of  the  same  company  stated  that  practically 
every  man  he  knows  on  the  road  had  been  involved  at  some  time 
with  a  loan  company.  The  eastern  manager  of  a  large  transconti- 
nental freight  company  stated  to  the  writer  that  after  an  ex- 
perience of  twenty  years  with  clerks  and  employees  of  different 
concerns  in  New  York  City,  he  was  convinced  that  the  salary  loan 
business  is  much  more  extensive  than  is  generally  believed.  A 
young  lady  who  collected  several  years  for  one  of  the  companies 
found  that  practically  all  of  the  employees  in  several  of  the  large 
downtown  business  houses  were  indebted  more  or  less  to  the  loan 
companies. 

This  large  estimate  which  is  made  by  the  employees  and  col- 
lectors for  different  loan  companies  is  denied  by  employers.  Their 
chief  method  of  securing  information  is  by  the  number  of  files 
upon  salaries  which  they  receive.  This  number  is  necessarily 
small  because  in  a  large  proportion  of  cases  the  employee  will  lose 
his  position  when  a  file  is  made  upon  his  wages.  The  superin- 
tendent of  an  important  publishing  house  said  to  the  writer  that 
none  of  his  employees  had,  loans  with  the  salary  loan  companies. 
He  also  stated  that  if  information  came  to  him  of  any  who  had 
such  loans  they  would  be  discharged.  Immediately  before  the 
conversation  with  the  employer,  the  writer  had  concluded  an 
interview  with  four  of  his  employees,  who  worked  in  an  ad- 
joining room,  all  of  whom  were  seriously  involved  with  a  loan 
company.  One  of  the  four  was  a  married  man  with  a  family  of 
six  children,  who  had  been  paying  an  exorbitant  rate  of  interest 
for  nearly  two  years,  under  the  threat  that  if  he  refused  his  em- 
ployer would  be  notified.  The  assistant  manager  of  a  large  trans- 
portation company  congratulated  his  firm  upon  the  fact  that  since 
they  had  begun  the  practice  of  discharging  an  employee  when  a 
file  was  placed  upon  his  wages,  that  they  had  succeeded  in  keeping 
their  employees  from  being  exploited  by  the  loan  companies. 
Managers  of  five  different  loan  offices  in  the  city  each  told  the 


VOLUME  OF  BUSINESS  AND  CAPITAL  EMPLOYED.  27 

writer  that  the  names  of  a  large  number  of  the  employees  of  this 
company  appeared  on  their  books,  and  that  these  men  were  con- 
sidered the  best  of  risks,  because  the  only  thing  necessary  to  col- 
lect from  a  delinquent  borrower  from  this  company  was  a  threat 
that  the  assistant  manager  would  be  notified  of  the  assignment  of 
wages.  The  private  secretary  to  the  treasurer  of  this  same  com- 
pany received  a  commission  of  6  per  cent  from  the  loan  company 
(a)  for  every  loan  which  an  employee  secured.  It  was  his  duty  to 
assist  the  loan  company  in  securing  information  about  men  who 
applied  for  loans. 

The  statements  made  by  the  managers  of  a  considerable  num- 
ber of  other  establishments  and  the  subsequent  investigation  of 
a  number  of  their  employees  who  had  loans  with  the  salary 
loan  companies  has  convinced  the  writer  that  the  two  cases  cited 
are  typical  of  general  conditions  in  establishments  in  which  the 
employer  will  discharge  a  man  when  it  is  known  that  he  has  given 
an  assignment  of  his  wages. 


(a)  The  amount  of  commission  paid  the  assistant  treasurer  for  April,  May, 
.June,  July,  August,  September  and  October,  1907,  according  to  the  books  of 
one  loan  company,  is  on  file  in  the  Bureau  of  Social  Research. 


V. 

CHARGES. 

The  nature  of  the  salary  loan  business  necessitates  a 
higher  rate  of  interest  than  that  charged  by  the  ordinary 
banking  corporation.  In  every  state  which  has  seriously  at- 
tempted to  regulate  and  not  prohibit  loans  on  salary  the  legal 
rate  has  ranged  from  iy2  to  3  per  cent  per  month,  depend- 
ing upon  the  amount  of  the  loan.  The  bill  recently  intro- 
duced in  the  Legislature  of  New  York  by  Assemblyman  Her- 
rick  of  the  Borough  of  Manhattan,  making  it  a  misdemeanor 
to  charge  more  than  6  per  cent  per  annum  on  a  loan  secured 
by  an  assignment  of  wages,  would,  if  enacted  and  enforced, 
absolutely  prohibit  this  line  of  business. 

The  rate  of  interest  should  always  be  proportional  to  the 
risk  taken  and  the  expense  involved.  This  is  clearly  brought 
out  by  an  exhaustive  study  (a)  of  pawnbroking  in  Europe 
and  the  United  States,  by  Dr.  William  R.  Patterson,  now  of 
the  Bureau  of  Municipal  Research,  in  which  illustrations  are 
given  from  different  foreign  countries  and  different  states  in 
the  United  States  where  the  law  permits  a  considerably 
higher  charge  than  the  ordinary  legal  rate.  There  are  sev- 
eral reasons  for  this  higher  charge.  The  value  of  an  assign- 
ment of  wages  to  be  earned  in  the  future  is  dependent  upon 
two  conditions:  the  permanency  of  the  position  and  the  col- 
lection of  the  salary.  There  are  many  influences  which  af- 
fect the  security  of  such  a  loan.  At  present  it  is  possible  in 
New  York  City  for  the  same  individual  to  obtain  loans 

(a)  Pawnbroking  in  Europe  and  the  United  States,  by  W.  R.  Patterson,  U.  S. 
Bulletin  of  Labor,  Vol.  4,  p.  173,  et  seq. 


CHARGES.  29 

from  several  different  companies  at  the  same  time,  all  of 
which  are  secured  by  an  assignment  of  his  wages.  Should 
this  individual  refuse  to  meet  his  payments  the  assignment 
of  salary  would  be  insufficient  to  cover  the  loans  with  the  dif- 
ferent companies.  It  is  also  possible  for  the  borrower  who 
has  loans  with  different  companies  to  collect  his  wages  and 
disappear.  It  is  true  that  the  "tracer"  will  probably  find  him, 
but  the  additional  expense  must  be  considered  in  any  attempt 
to  establish  a  reasonable  rate.  Another  reason  for  the  higher 
charge  is  that  the  loans  are  for  a  small  amount  and  are  paid 
for  the  most  part  in  weekly  installments.  This  necessitates 
a  comparatively  large  administrative  expense.  An  extensive 
system  of  investigation  is  necessary  for  any  salary  loan  com- 
pany in  order  to  protect  itself,  and  this  is  especially  large 
when  compared  with  the  amount  of  the  individual  loan.  Lack 
of  definite  legal  protection  and  the  constant  danger  of  court 
expense  must  also  be  considered  in  the  determination  of  a 
reasonable  charge. 

The  important  question  concerning  salary  loan  companies 
in  New  York  City  at  the  present  time,  so  far  as  rates  are  con- 
cerned, is  whether  the  rates  charged  by  the  different  loan 
companies  are  necessary  in  order  to  secure  a  fair  return  upon 
the  investment  or  whether  the  necessity  of  the  borrower  has 
been  exploited  in  securing  an  exorbitant  charge. 

Table  I  shows  the  amount  of  cash  received,  the  conditions 
of  payment,  the  total  amount  repaid,  and  the  amount  repaid 
in  excess  of  the  amount  borrowed  for  the  important  loan 
companies.  The  loans  are  grouped  according  to  the  approx- 
imate amount  of  each.  When  loans  from  the  same  company 
for  the  same  amount,  but  under  different  conditions  of  pay- 
ment, had  been  investigated,  the  one  the  writer  found  most  fre- 
quently in  his  investigation  was  the  one  used  in  the  following 
table.  The  loan  companies  are  represented  by  letters  of  the 
alphabet.  The  names  and  addresses  of  the  companies  which  the 
letters  represent  are  on  file  in  the  Bureau  of  Social  Research. 

The  object  of  the  following  table  is  twofold:  to  show  the 
actual  charges  of  the  companies  and  to  afford  a  comparison 


30  SALARY  LOAN  BUSINESS  IN  NEW  YORK  CITY. 

TABLE  1. 

TABLE  SHOWING  CHARGES  (d)  OF  SALARY  LOAN  COMPANIES  IN  NEW  YORK  CITY. 


Company. 

Amount  of 
cash  received 
by  the 
borrower. 

Weekly  Payments. 

Total  amount 
paid  by  the 
borrower. 

Amount  paid 
in  excess  of 
cash   received. 

Amount  of 
each. 

Number. 

S(c) 

14.00 

1.95 

12 

23.40 

9.40 

F 

1325 

8.00 

6 

18.00 

4.75 

I 

13^5 

3.00 

6 

18.00 

4.75 

N 

17.50 

2.10 

12 

25.20 

7.70 

R(c) 

17.00 

2.00 

12 

24.00 

7.0i» 

L 

15.00 

2.00 

10 

20.00 

5.00 

E 

15.00 

2.00 

10 

20.00 

5.00 

K 

1500 

1.50 

14 

21.00 

6.00 

C 

15.00 

1.50 

14 

21.00 

6.00 

P 

18.00 

2.00 

12 

24.00 

6-00 

J 

18.00 

2.00 

12 

24.00 

6.00 

I 

20.00 

5.00 

5 

25.00 

5  00 

F 

20.00 

5.00 

5 

25.00 

5.00 

D 

20.00 

5.00 

5 

25.00 

5.00 

N 

21.00 

2.50 

12 

30  00 

9  00 

R(c) 

21.50 

2.50 

12 

30.00 

8.50 

K 

20.00 

2.00 

14 

28.00 

8.  CO 

C 

2000 

2.00 

14 

28.00 

8.00 

E 

20.00 

2.25 

12 

27.00 

7.00 

A 

20.00 

1.50 

20 

30.00 

10.00 

P 

2250 

2.50 

12 

30.00 

7.50 

J 

22.50 

2.50 

12 

80.00 

7.50 

T 

20.0o 

25.00 

l(a> 

25.00 

5.00 

M 

24.00 

4.00 

8 

32.00 

8.00 

N 

25.00 

1.75 

24 

42.00 

17.00 

Q 

25.00 

2  95 

12 

35.40 

10.40 

R(c) 

26.00 

2.45 

16 

89.20 

13.20 

I 

24.00 

5.00 

6 

30.00 

6.00 

G 

24.50 

4.00 

8 

32.00 

7.50 

D 

24.00 

5.00 

6 

30.00 

6.00 

F 

24.00 

5.00 

6 

30.00 

6.00 

0(c) 

24.00 

2.25 

16 

86  00 

12.00 

P 

27.00 

2.45 

16 

89.20 

12.20 

J 

27.00 

2.45 

16 

39.20 

12.20 

L 

25.00 

2.85 

12 

34.20 

9.20 

C 

25.00 

2.50 

14 

35.00 

10.00 

K 

25.00 

2.50 

14 

35.00 

10.00 

E 

25.00 

8.00 

11 

33.00 

8.00 

H 

25.00 

2.75 

12 

33.00 

8.00 

B 

25.00 

30.00 

Ha) 

30.00 

5.00 

R(c) 

26.00 

8.00 

12 

86.00 

10.00 

C 

30.00 

3.00 

14 

42.00 

12.00 

K 

30.00 

3.00 

14 

42.00 

12.00 

P 

27.00 

3.00 

12 

86.00 

9.00 

J 

27.00 

3.00 

12 

36.00 

9.00 

N 

80.00 

8.25 

12 

39.00 

9.00 

G 

30.00 

20.00 

2(a) 

40.00 

10.00 

E 

30.00 

3  00 

13 

39.00 

9.00 

M 

3500 

3.25 

16 

52.00 

17.00 

R(c) 

34.00 

2.65 

20 

58.00 

19.00 

D 

84.00 

2.65 

20 

53  00 

19.00 

N 

86.00 

6.75 

8(b) 

54.00 

18.00 

C 

35.00 

3.50 

14 

49.00 

14.00 

K 

85.00 

3.50 

14 

49.00 

14.00 

J 

35.00 

2.65 

20 

53.00 

18.00 

P 

a^.oo 

2.65 

20 

53.00 

18.00 

35.00 

2.65 

20 

53.00 

18.00 

35.00 

2.PO 

20 

52.00 

17.00 

E 

3500 

4.50 

10 

45.00 

10.00 

N 

4000 

3.15 

20 

63.00 

23.00 

J 

40.00 

3.15 

20 

63.00 

23.00 

P 

40.00 

3.15 

20 

63.00 

23.00 

C 

40.00 

4.00 

14 

56.00 

16.00 

K 

40.00 

4.00 

14 

56.00 

16.00 

R(c) 

39.00 

9.00 

6(b) 

54.00 

15  00 

0(c) 

39.00 

8.90 

8b) 

53.40 

14.40 

E 

4000 

4.00 

13 

52.00 

12.00 

(a)  Monthly  payments. 

(b)  Semi-Monthly  payments. 

(c)  Commission  of  $1.00  charged  upon  first  loan.    Charges  are  given  for  the 

first  loan. 

(d)  In  each  group  the  loans  are  arranged  according  to  the  amount  of  charges. 


CHARGES.  31 

of  the  charges  of  the  different  companies  upon  loans  of  ap- 
proximately the  same  amount.  The  table  was  compiled 
from  loans  actually  negotiated.  This  precluded  the  possi- 
bility of  using  examples  involving  loans  of  exactly  the  same 
amount  for  different  companies.  The  loans  are  arranged  in  six 
groups:  (i)  loans  approximating  $15.00,  (2)  loans  approximat- 
ing $20.00,  (3)  loans  approximating  $25.00,  (4)  loans  approxi- 
mating $30.00,  (5)  loans  approximating  $35.00  and  the  last  loans 
approximating  $40.00.  The  highest  gross  charge  in  the  table  is 
by  S  on  a  loan  of  $14.00  payable  in  twelve  weekly  payments 
of  $1.95  each.  The  lowest  gross  charge  is  by  B  on  a  loan  of 
$25.00  payable  in  one  month.  The  charges  vary  considerably 
with  the  different  companies  and  for  different  amounts. 
Companies  R,  O,  and  S  charge  a  commission  of  $1.00  upon  the 
first  loan.  The  charges  in  the  table  are  upon  the  first  loan. 
In  case  an  additional  loan  is  taken  with  any  of  these  three 
companies  the  charge  is  $1.00  less.  The  time  for  which  the 
loans  were  secured  varies  from  one  month  in  the  case  of  T 
and  B  to  twenty  weeks  in  the  case  of  several  of  the  other 
companies.  The  average  time  for  all  the  loans  given  in  the 
table  is  about  13  weeks.  The  payments  were  weekly,  semi- 
monthly, or  monthly.  About  90  per  cent  of  them  were  weekly. 
The  frequency  of  the  payments  is  determined  by  the  pay  day 
of  the  employee.  The  loan  company  makes  it  a  rule  to  have 
the  payments  become  due  either  the  day  when  the  borrower 
receives  his  salary  or  the  day  following.  The  amount  of  the 
weekly  payments  varies  from  $1.50  to  $5.00,  the  semi-monthly 
payments  from  $6.75  to  $9.00. 

Thus  it  is  evident  that  the  policy  of  the  loan  companies  is  to< 
keep  the  payments  reasonably  small.  The  manager  of  one  of  the 
loan  offices  in  the  city  said  to  the  writer :  "We  prefer  to  make  the 
payments  small  because  it  is  much  easier  to  collect  a  small 
payment  than  a  large  one." 

Table  2  shows  the  amount  of  cash  received  by  the  bor- 
rower, the  conditions  of  repayment,  the  total  amount  repaid, 
the  difference  between  the  amount  of  cash  received  by  the 
borrower  and  the  amount  repaid  in  installments,  and  the 


SALARY  LOAN  BUSINESS  IN  NEW  YORK  CITY. 


gross  per  cent  of  return  upon  the  loans  of  different  amounts 
by  one  of  the  leading  loan  offices  of  the  city. 

TABLE  2. 

TABLE  SHOWING  TOTAL  CHARGES  EXPRESSED  IN  TERMS  OF  AN  INTEREST 

RATE,  (c)  UPON  SELECTED  LOANS  MADE  BY  ONE  REPRESENTATIVE 

SALARY  LOAN  COMPANY. 


1 

Payments. 

K 

h 

.a  a? 

II 

^ 

0    >. 

o  •- 

Q    03 

c?     £H 

'O 

S  'o 

^o  -*^  x-^ 

QQ     *d 

§  fe 

«  g 

<y   o 

o  p  3 

2  2 

5  ® 

•g 

|| 

®  5 

111 

&3   S 

ll 

VI 

O 

+3 

1 

a 

1 

|1.2 

3  g  s 

S  §  ® 

iC  0    CS 

~    — 

a 

m 

M 

c8    o 

rt. 

1  «4    fc 

S3    S    ^ 

X 

a  6 

-R  "S 

^a  o  S 

O    03    ft 

•go 

p 

1 

1 

o  i 

"5  | 

II 

9 

|S 

B* 

II 

$17.00 

$2.00 

Weekly 

12 

$24.00 

$7.00 

5.750 

1731 

21.50 

2.50 

* 

12 

30.00 

8.50 

5.539 

1550 

26.00 

2.45 

1 

16 

89  20 

13.20 

5.300 

1366 

26.00 

3.00 

« 

12 

36.00 

10.00 

5.393 

1435 

34.00 

4.00 

• 

12 

48.00 

14.00 

5.750 

1731 

34.00 

2.65 

• 

20 

53.00 

19.00 

4.660 

968 

39.00 

9.00 

Bi-Weekly 

6 

54.00 

15.00 

10.199 

1149 

40.00 

4.50 

Weekly 

12 

54.00 

14.00 

4.947 

1132 

40.00 

20.00 

Monthly 

3 

60.00 

20.00 

23.379 

1144 

(a)  Rate  shows  the  per  cent  of  gross  return  to  the  loan  office  if  none  of 
the  amount  paid  by  the  borrower  in  excess  of  cash  received  by  him  is  loaned; 
i.  e.,  if  no  portion  of  gross  profits  is  added  to  capital. 

(b)  Rate  shows  the  per  cent  of  gross  return  to  the  loan  office  if  all  of  the 
charges  were  immediately  loaned  when  they  were  received;    i.  e.,  if  gross 
profits  are  immediately  added  to  capital  account. 

(c)  Interest  rate  computed  by  Mr.  H.  W.  Robertson,  F.  A.  S. 

The  charges  given  in  the  preceding  table  are  approximately 
the  same  as  those  of  the  other  loan  offices  in  the  city  as  the  com- 
pany in  question  is  one  of  the  oldest  concerns  and  the  rates  in  the 
other  offices  are  based  largely  upon  those  used  by  this  company. 
The  company  is  designated  as  R  in  table  i,  and  a  study  of  that 
table  will  show  that  the  rates  charged  are  as  near  an  average  as 
those  of  any  company  that  could  be  selected.  The  charges  given 
in  the  table  are  for  the  first  loan  in  each  case,  and  since  there  is  a 
charge  of  $1.00  commission  upon  the  first  loan  charges  upon 
succeeding  loans  would  be  less.  The  charges  expressed  in  the 
rate  of  interest  per  interval  show  the  gross  income  to  the 


CHARGES. 


33 


loan  office  if  none  of  the  charges  received  are  used 
in  making  new  loans.  The  same  charges  expressed  in  terms 
of  an  annual  interest  rate  show  the  gross  income  to  the 
loan  office  if  all  the  charges  received  are  immediately  loaned 
at  the  same  rate.  The  actual  situation  lies  between  these  ex- 
tremes. It  is  impossible  to  determine  what  proportion  of  the 
charges  is  loaned  by  the  salary  loan  offices  in  New  York  City; 
but  the  fact  that  several  of  the  largest  companies  have  recently 
opened  branch  offices  creates  a  strong  presumption  that  some 
share  of  charges  periodically  received  is  used  for  making  new 
loans.  The  company  represented  in  the  table  under  discussion 
is  a  good  illustration  of  the  tendency  to  expand  by  re-investing 
profits.  It  has  three  different  offices  in  Greater  New  York,  and 
one  or  more  offices  in  over  sixty  different  cities  in  the  United 
States  and  Canada. 

Tables  3,  4,  5  and  6  are  given  to  show  the  charges  made  by 
the  several  loan  companies  upon  the  different  loans  investigated 
by  the  writer. 

TABLE  3. 

TABLE  SHOWING  CHARGES   MADE  BY  PATTERSON  AND  COMPANY(«)  UPON 
DIFFERENT  LOANS. 


Payments. 

Amount  of 
cash  received 

Tw  tlin. 

Total  amount 
paid  by  the 

Amount  paid 
in  excess  of 

Uy  1116 

borrower. 

Amount  of 
each. 

When  due. 

Number. 

borrower. 

cash  received. 

$17.50 

$2.10 

Weekly 

12 

$25.20 

$7.70 

18.00 

6.00 

Bi-Weekly 

4 

24.00 

6.00 

20.00 

10.00 

Monthly 

3 

30.00 

10.00 

21.00 

2.50 

Weekly 

12 

30.00 

9.00 

25.00 

1.75 

Weekly 

24 

42.00 

17.00 

25.00 

17.00 

Monthly 

2 

34.00 

9.00 

27.50 

4.90 

Bi-Weekly 

8 

39.20 

11.70 

28.00 

6.70 

Bi-Weekly 

6 

40.20 

12.20 

30.00 
36.00 

3.25 
6.75 

Weekly 
Bi-Weekly 

12 

8 

39.00 
54  00 

9.00 
18.00 

40.00 

3.15 

Weekly 

20 

63.00 

23.00 

54.00 

4.00 

Weekly 

20 

80.00 

26.00 

(a)  According  to  the  record  on  file  in  the  County  Clerk's  office,  A.  W. 
Connable  also  owns  the  offices  of  Standard  Credit  Co.,  Wells  and  Company 
and  Harper  Realty  Company. 


34 


SALARY  LOAN  BUSINESS  IN   NEW  YORK   CITY. 


In  table  3,  Patterson  &  Company  was  selected  because  it 
represents  seven  offices  in  the  city,  all  of  which  are  doing  a  large 
business.  The  table  was  prepared  from  loans  actually  paid 
by  different  borrowers  in  the  offices  of  Patterson  &  Company. 
Some  of  the  loans  were  secured  in  the  Brooklyn  office  and  some 
in  the  New  York  offices.  The  charges  vary  considerably  with 
different  amounts,  also  with  the  same  amounts  upon  different 
conditions  of  payment.  The  charge  made  upon  the  loan  of 
$17.50  payable  in  twelve  weekly  installments  of  $2.10  each  is 
the  highest  charge  recorded  in  the  table.  It  is  over  50  per  cent 
higher  than  the  charge  upon  a  loan  of  $30.00  payable  in  twelve 
weekly  installments  of  $3.25  each.  The  time  of  payment  for 
the  different  loans  varies  from  twelve  weeks  to  twenty-four 
weeks.  The  average  time  for  all  of  the  loans  is  about  fourteen 
weeks.  The  amount  of  the  loan  averages  considerably  higher 
with  this  company  than  with  the  brokers  who  conduct  business 
for  H.  A.  Courtright,  of  Providence,  R.  I. 


TABLE  4. 

TABLE  SHOWING  CHARGES  MADE  BY  BROKERS  (a)  WHO  CONDUCT  BUSINESS 

FOR    H.    A.    COURTRIGHT. 


Amount  of 
cash  received 
by  the 
borrower. 

Payments. 

Total  amount 
paid  by  the 
borrower. 

Amount  paid 
in  excess  of 
the  amount 
received. 

Amount  of 
each. 

When  due. 

Number. 

$10.50 

$2.00 

Weekly 

8 

$16.00 

$5.50 

10.50 

5.00 

Bi-Weekly 

3 

15.00 

4.50 

13.25 

3.00 

Weekly 

6 

18.00 

4.75 

13.25 

6.00 

Bi-Weekly 

3 

18.00 

4.75 

20.00 

5.00 

Weekly 

5 

25.00 

5.00 

24.00 

30.00 

Monthly 

1 

30.00 

6.00 

24.00 

3.00 

Weekly 

12 

36.00 

12.00 

24.00 

5.00 

Weekly 

6 

30.00 

6.00 

28.00 

35.00 

Monthly 

1 

35.00 

7  00 

34.00 

2.65 

Weekly 

20 

53.00 

19.00 

(a)  Howard,  C.  A., 
Graham,  Walter, 
Chesterkirk,  R.  ( 


CHARGES. 


35 


The  preceding  table  shows  the  charges  made  by  the  brokers 
who  conduct  business  for  H.  A.  Courtright,  of  Providence, 
R.  I.  The  charges  vary  more  with  the  different  loans  in  this 
table  than  with  any  company  investigated.  The  rate  charged  upon 
a  loan  of  $10.50,  payable  in  eight  weekly  installments  of  $2.00 
<°ach,  is  more  than  100  per  cent  higher  than  in  the  case  of  a  loan 
of  $24.00  payable  in  one  month.  The  charge  upon  a  loan  of 
$10.50  payable  in  eight  weekly  installments  of  $2.00  each  is  the 
highest  rate  charged  by  any  company  upon  any  amount  which 
the  writer  has  investigated.  The  charges  on  all  of  the  different 
amounts  of  $20.00  or  less  are  considerably  more  than  the  charges 
of  the  majority  of  the  other  loan  companies.  This  fact  is  sig- 
nificant, since  the  managers  of  the  different  offices  encourage 
the  borrower  to  take  the  smaller  loan.  The  loans  for  $10.50 
and  $13.25  were  found  much  more  frequently  in  the  investiga- 
tion than  loans  for  any  other  amount.  The  writer  applied  for 
a  loan  of  $20.00  at  the  office  of  one  of  the  brokers  and  was 
strongly  urged  by  the  lady  in  charge  to  take  two  loans  of  $10.50 
each  instead  of  one  loan  of  $20.00.  The  reason  for  such  advice 
from  the  point  of  view  of  the  loan  company  is  evident  from  the 

TABLE  5. 

TABLE  SHOWING  CHARGES  MADE  BY  MOORE  AND  COMPANY  AND  CARR 

AND  COMPANY,  (a) 


Payments. 

Amount  of 

Total  amount 

Amount  paid 

cash  received 
by  the 
borrower. 

Amount  of 
each. 

When  due. 

Number. 

paid  by  the 
borrower. 

in  excess  of 
the  amount 
received. 

$10.00 

$1.25 

Weekly 

12 

$15.00 

$5.00 

15.00 

1.50 

14 

21.00 

6.00 

20.00 

2.00 

14 

28.00 

8.00 

25.00 

2.50 

14 

35.00 

10.00 

30.00 

3.00 

14 

42.00 

12.00 

35.00 

3.50 

14 

49.00 

14.00 

40.00 

4.00 

14 

56.00 

16.00 

45.00 

4.50 

14 

63.00 

18.00 

50.00 

5.00 

14 

70.00 

20.00 

(a)  The  offices  are  both  owned  by  Mr.  S.  Carr  Carroll. 


3D  SALARY  LOAN  BUSINESS  IN  NEW  YORK  CITY. 

table.  The  amount  paid  in  excess  of  the  amount  of  cash  received 
by  the  borrower  in  the  case  of  a  loan  of  $10.50  payable  in  eight 
weekly  installments  of  $2.00  each  is  $5.50,  while  the  amount 
upon  a  loan  of  $20.00  payable  in  five  weekly  installments  of  $5.00 
each  is  only  $5.00. 

Table  5  shows  the  charges  made  by  Carr  &  Co.  and  Moore 
&  Company,  two  offices  which  are  owned  by  Mr.  S.  Carr 
Carroll.  With  the  exception  of  the  loan  of  $10.00  payable 
in  twelve  weekly  payments  of  $1.25  each,  the  charges  upon 
loans  of  different  amounts  are  the  same.  The  loan  in  each 
case  is  repaid  in  fourteen  weekly  installments  of  10  per  cent  of 
the  amount  of  cash  received.  These  are  the  only  companies 
found  in  the  investigation  where  the  charge  was  the  same  for 
the  different  amounts. 

Table  6  shows  the  charges  made  by  the  Federal  Dis- 
count Company.  (a)  The  highest  charge  is  upon  a  loan  of 
$10.00  payable  in  eleven  weekly  installments  of  $1.25  each.  The 
lowest  charge  is  upon  loans  of  $30.00,  $40.00,  and  $50.00  re- 
spectively. The  charge  being  10  per  cent  of  the  cash  received 


TABLE  6. 

TABLE  SHOWING  CHARGES  MADE  BY  THE  FEDERAL  DISCOUNT  COMPANY. 


Payments. 

Amount  of 

Total  amount 

Amount  paid 

cash  received 
by  the 
borrower. 

Amount  of 

When  due. 

Number. 

paid  by  the 
borrower. 

in  excess  of 
the  amount 
received. 

each. 

$10.00 

$1.25 

Weekly 

11 

$13.75 

$3.75 

15.00 

2.00 

10 

20.00 

5.00 

18.00 

2.00 

12 

24.00 

6.00 

20.00 

2.25 

12 

27.00 

7.00 

25.00 

3.00 

11 

33.00 

8.00 

30.00 

3.00 

13 

39.00 

9.00 

35.00 

4.50 

10 

45.00 

10.00 

40.00 

4.00 

13 

52.00 

12.00 

50.00 

5.00 

13 

65.00 

15.00 

(a)   This  company  has  recently  discontinued  business. 


CHARGES.  37 

each  week  for  thirteen  weeks.  This  amount  is  10  per  cent  of 
the  cash  received  less  than  the  uniform  charge  made  by  Moore 
and  Company  and  Carr  and  Company.  The  time  of  payment 
averages  about  twelve  weeks.  The  most  common  loan  made  by 
this  company  was  that  of  $25.00  payable  in  eleven  weekly  in- 
stallments of  $3.00  each. 

Only  in  extreme  cases  when  the  services  of  a  "tracer"  are 
employed  are  any  charges  made  in  addition  to  the  regular  rates 
by  any  of  the  salary  loan  companies,  except  the  brokers  for 
H.  A.  Courtright.  With  the  brokers  (a)  who  conduct  busi- 
ness for  him  the  extra  charges  are  numerous  and  extremely 
complicated.  A  few  illustrations  will  serve  to  show  how  very 
irregular  these  extra  charges  are  in  different  cases. 

Case  i :  An  employee  secured  a  loan  of  Howard  on 
November  i,  in  which  he  received  $24.00  cash  to  pay  $30.00 
December  i.  He  secured  his  salary  late  in  the  afternoon  of 
December  I  and  reserved  $30.00  to  pay  the  loan.  Before  he 
had  time  to  send  the  money  to  Providence  on  the  following 
morning  a  representative  of  the  Coast  Cities  Collection  Company 
called  upon  him  and  informed  him  that  he  must  pay  $30.00  on 
loan,  $1.49  protest  fee,  $1.00  brokerage  fee  and  $5.00  collec- 
tion fee,  a  total  of  $37.49,  or  the  assignment  of  salary  which  he 
had  given  the  loan  company  would  be  filed  with  his  employer. 

Case  2:  An  employee  had  made  his  payments  and 
was  surprised  to  find  a  file  upon  his  wages  for  $29.61,  which 
the  Coast  Cities  Collection  Company  claimed  as  extra  charges 
for  delinquent  payments.  The  file  was  released  by  Mr.  Nowlin  (b) 
upon  the  payment  of  $3.00  collection  fees.  The  Coast  Cities 
Collection  Company  made  no  collection  except  the  $3.00. 

Case  3:  A  borrower  was  late  in  his  payments  and 
was  charged  $1.49  protest  fee  on  each  of  two  of  the  six 
notes  which  he  had  signed,  and  $3.00  collection  fee.  The  $3.00 
collection  fee  was  for  the  collection  of  $2.98,  as  the  collecting 
agency  had  nothing  to  do  with  the  payment  of  the  six  notes, 
since  the  money  was  sent  direct  to  Providence,  R.  I. 

Case    4:     Upon     the     same     amount     borrowed     as     case 

(a)  Chesterkirk,  Howard,  Graham. 

(b)  Manager  of  the  Coast  Cities  Collection  Company. 


38  SALARY  LOAN  BUSINESS  IN   NEW  YORK  CITY. 

number  three,  a  protest  fee  of  $1.61  was  charged  on  two 
different  notes  and  a  collection  fee  of  $2.00,  making  $5.22 
extra  costs. 

Case  5:  An  employee  secured  a  loan  of  $13.25  and 
paid  it  in  six  weekly  installments  of  three  dollars  each.  A 
failure  to  cash  the  check  which  was  sent  him  from  Providence, 
R.  L,  caused  a  delay  in  some  of  the  payments.  He  received 
a  letter  from  the  Coast  Cities  Collection  Company  asking  him 
to  call  and  settle.  At  the  office  he  was  informed  that  there  was 
$10.00  due  on  the  loan  because  the  payments  did  not  all  reach 
Providence  upon  the  dates  when  due.  He  refused  to  pay  the 
amount  demanded  and  a  few  days  later  received  a  letter  from 
the  collecting  agency  offering  to  settle  for  $7.83.  Upon  refusal 
to  pay  this  additional  charge  an  assignment  of  salary  was  served 
upon  his  employer,  and  upon  the  employers  of  each  of  his  en- 
dorsers, for  $24.66.  When  one  of  the  endorsers  called  upon  the 
Coast  Cities  Collection  Company  to  know  the  cause  of  the  file 
upon  his  wages  for  $24.66,  he  was  informed  that  the  borrower 
was  delinquent  in  his  payments  and  offered  to  release  the  file 
for  $5.22 — two  protest  fees  of  $1.61  each  and  $2.00  collection 
charges.  The  case  was  placed  in  the  hands  of  an  attorney  (a) 
to  whom  Mr.  Nowlin  admitted  that  Mr.  H.  A.  Courtright 
had  no  claim  against  either  of  the  endorsers,  and  no  fur- 
ther attempt  was  made  to  collect  the  extra  charges.  The 
amounts  included  in  this  consideration  are  of  peculiar  signifi- 
cance. The  file  called  for  $73.98,  Mr.  Nowlin  offered  to  settle 
for  $10.00,  $7.83  and  $5.22  respectively,  and  finally  admitted 
to  an  attorney  that  he  had  no  legal  basis  for  any  amount. 

Case  6:  An  employee  secured  a  loan  of  $13.25  to 
be  paid  in  six  weekly  installments  of  $3.00  each.  The  first 
payment  did  not  reach  Providence  upon  the  appointed  day  be- 
cause of  a  difficulty  concerning  the  post-office  order ;  the  second 
payment  was  sent  three  days  before  due,  the  third  payment  was 
made  by  telegram  to  assure  prompt  delivery.  Although  the 
account  was  in  this  condition,  because  of  the  failure  of  the  first 
payment  to  reach  Providence  at  the  precise  time  when  due  and 

(a)  Mr.  Bernard  Robinson,  No.  34  Pine  Street. 


CHARGES.  39 

the  failure  to  meet  the  fourth  payment  promptly  the  Coast 
Cities  Collection  Company  filed  upon  the  employee's  wages 
for  $26.48,  $9.00  due  per  contract,  four  protest  fees  of  $1.37 
each  ($5.48),  $10.00  attorney  fees,  $2.00  collection  fees.  It  was 
finally  settled,  after  the  employee  had  lost  considerable  time,  for 
the  entire  amount  demanded  less  the  attorney  fees.  The 
loan  was  secured  October  15  and  the  amount  referred  to  above 
was  paid  November  26,  exactly  six  weeks  from  the  date  when 
the  loan  was  secured,  which  was  the  time  agreed  upon.  Thus 
it  is  seen  that  the  loan  company  received  $25.48  in  a  period  of 
six  weeks  for  a  loan  of  $13.25. 

When  the  manager  of  the  Coast  Cities  Collection  Company 
was  asked  the  reason  for  the  different  charges  upon  the  same 
loans  under  the  same  conditions,  he  responded  that  he  did  not 
know;  the  only  knowledge  he  had  of  the  transaction  was  that 
the  charges  were  sent  to  him  by  H.  A.  Courtright  to  collect. 
This  same  manager,  however,  admitted  to  an  attorney,  whose 
signed  statement  is  on  record  in  the  office  of  the  Bureau  of 
Social  Research,  that  he  was  very  closely  connected  with  Mr. 
H.  A.  Courtright  and  that  the  extra  charges  were  very  largely 
determined  by  himself.  Mr.  Nowlin  further  stated  that  the 
extra  charges  were  generally  what  he  thought  he  could  collect. 


VI. 

EXPENSE  OF  THE  TRANSACTION  AND  ESTIMATED 

PROFITS. 

To  ascertain  the  exact  expense  of  conducting  the  loan  office 
in  the  City  of  New  York  would  necessitate  an  examination  of 
the  books  and  records  of  every  office.  This  is  an  impossibility  at 
the  present  time.  There  are  sufficient  data  at  hand,  however,  to 
make  an  estimate.  This  estimate  was  prepared  by  the  manager 
of  a  loan  office  in  the  city  from  her  actual  experience  in  opening 
a  new  office  and  managing  it  for  over  two  years.  Facts  secured 
from  the  managers  of  five  other  offices  in  the  city  correspond 
very  closely  to  her  estimate.  There  are  of  necessity  offices  which 
expend  more  and  offices  which  expend  less,  but  it  is  probable 
that  with  a  larger  expenditure  there  will  be  a  larger  income  and 
with  a  smaller  expenditure  a  smaller  income. 

The  following  schedules  are  an  attempt  to  estimate  the  capi- 
tal invested  and  the  annual  operating  expenses  of  a  typical  salary 
loan  office. 

SCHEDULE  A. 

ESTIMATED    AMOUNT    OF    CAPITAL    INVESTED  IN   A   TYPICAL 
SALARY  LOAN  OFFICE. 

Loanable  Funds  $9,500.00 

Initial  Expenses: 

Office  furniture  and  fixtures  (includ- 
ing safe,  desks,  chairs,  rugs,  etc.)  . .      $450.00 
Legal  papers  and  registration  charges         50.00 

500.00 


Total  Amount  of  Capital  Invested $10,000.00 


EXPENSE  OF  THE  TRANSACTION  AND  ESTIMATED   PROFITS.      4! 

SCHEDULE  B. 

ESTIMATED  OPERATING  EXPENSES  PER  ANNUM  OF  A  TYPICAL 
SALARY  LOAN  OFFICE. 

Wages  and  Salaries: 

Manager  $750.00 

Cashier 600.00 

Investigator    600.00 

Collector   500.00 

$2,450.00 

Rent   1,000.00 

Advertising   2,000.00 

Commissions   1,000.00 

Legal  Expenses  150.00 

Stationery  and  Printing 125.00 

Postage,  Telephone,  Telegraph 125.00 

Depreciation  of  office  furniture  and  fixtures 75-°° 

Insurance    25.00 

Miscellaneous    50.00 


Total  Operating  Expenses $7,000.00 


Many  instances  could  be  cited  to  give  an  idea  of  the  profit- 
ableness of  the  salary  loan  business.  The  owner  of  a  prominent 
office  in  the  city  recently  offered  to  guarantee  a  young  man 
$10,000  net  profit  per  year  if  he  would  invest  $8,000  in  an  office. 
He  said  he  was  almost  certain  that  the  returns  would  be  much 
larger.  A  careful  examination  of  the  books  of  one  of  the  offices 
in  the  city  (a)  showed  that  in  one  month  a  net  gain  of  $541.00 
was  realized  upon  loans  aggregating  $1,889.00,  a  clear  profit  of 
28.64%  'm  one  month.  Based  upon  this  rate  of  profit,  the 
annual  net  income  from  an  office  with  $10,000  capital  would  be 
$34,368.  An  owner  of  two  large  offices  in  the  city  is  authority 

(a)  A  signed  statement  by  the  manager  of  the  office  is  on  file  in  Bureau 
of  Social  Research. 


42  SALARY  LOAN  BUSINESS  IN   NEW  YORK  CITY. 

for  the  statement  that  a  friend  of  his  began  business  in  New 
York  City  about  three  years  ago  with  $25,000.  Recently  he 
was  offered  $60,000  for  his  three  offices  and  in  the  meantime  he 
has  placed  $75,000  to  his  credit  in  the  bank,  making  $110,000 
clear  profit  in  addition  to  his  living  expenses,  in  three  years  upon 
a  capital  of  $25,000.  Several  of  the  men  who  have  a  large 
number  of  offices  and  are  doing  a  very  extensive  business  began 
with  a  small  amount  of  capital  and  have  been  in  the  business  only 
a  short  period  of  time.  It  is  the  belief  of  a  number  of  the  em- 
ployees of  D.  H.  Tolman  that  he  began  the  business  of  loaning 
money  on  salaries  a  few  years  ago  with  practically  no  capital  and 
to-day  he  is  many  times  a  millionaire  with  offices  in  all  the  prin- 
cipal cities  of  the  United  States  and  Canada. 


VII. 

BUSINESS  METHODS  NOW  EMPLOYED. 

The  loan  companies  have  several  different  methods  by  which 
they  bring  their  business  to  the  attention  of  the  public.  First 
among  these  is  the  advertising  (a)  in  the  daily  papers.  On  page 
44  are  shown  a  few  of  the  advertisements  which  recently  appeared 
in  the  New  York  City  daily  papers. 

The  promise  of  secrecy  is  prominent  in  all  the  advertisements. 
This  is  one  of  the  chief  points  which  the  loan  companies  empha- 
size in  order  to  secure  business.  "Confidential,"  "quick  and  con- 
fidential/' "confidentially,"  "Employees  appreciate  absolute  pri- 
vacy," "without  publicity,"  "our  office  private,"  "We  guaran- 
tee every  loan  will  be  absolutely  private  and  confidential,"  "ab- 
solutely private,"  "No  embarrassing  inquiry  made  of  your  fam- 
ily, employer  or  friends,"  "We  guarantee  absolute  secrecy." 
These  are  a  few  of  the  stock  phrases  used  to  catch  the  eye  of 
the  prospective  borrower.  One  company  (b)  goes  so  far  as  to 
promise  that  "A  written  guarantee  will  be  given  you  not  to 
enforce  payment  through  your  firm." 

Ain  extract  from  a  letter  written  March  10,  1908,  to  an  em- 
ployee who  had  been  lured  into  securing  a  loan  by  the  strict 
promise  that  his  employer  should  never  know  of  the  transaction, 
shows  how  well  the  agreement  is  kept:  "Your  letter  at  hand 
and  noted  and  in  reply  will  say  that  you  are  making  yourself 
out  a  liar.  .  .  .  You  can  either  pay  this  remaining  balance  of 
$5.10  or  I  shall  file  a  claim  and  in  that  way  I  will  be  notified  by 
your  firm  how  much  they  know  about  your  agreement  here.  You 
can  use  your  pleasure  about  this  pay  or  have  papers  filed.  I  will 
give  you  until  the  I7th  to  remit  balance."  Receipts  in  the  hands 
of  the  writer  show  that  the  employee  who  received  this  letter 

(a)  For  amount  of  advertising  in  different  papers,  see  page  23. 

(b)  Mason  Financial  Company,  116  Nassau  Street. 


44 


SALARY  LOAN  BUSINESS  IN  NEW  YORK  CITY. 


sAMEBi?* 


L=,,^v 

iJ^tffe^ 


" 


w 


LO/ 

any  one  woi 


,  SALAKY 

We  loan  money 


. .jrther  than  thai 

•f-ntee  that  every  loan  made  In 
Jill  we  absolutely  private  and  c 
•lour  tnends.  relatives  or  employ 
know  anything  about  It.  The  roor 

%X£"&^V^™ 

WELLS  fit  CO., 
95  Nassau  St.,  Rcom 
^s 


^tfftll 

GAN'T  STOP  THE 
^RUNONHERON.flNDGO. 

Tee    line   la   goiiing    longer   every    m.nute. 
but   we  still  -coutinue  to  hand  out  money. 

No  Scarcity  of  Ready  Cash  Here. 

Come  and  get  all  you  need  on  your  name; 
we  iprocure  the  money  for  you  without  mort- 
gage 'or  indorsees.  The  only  requirement 


that  you  arc   working  and  holding  a  steady 
position.     No  ono  need  ever  knov/.    Tou  can 
easy   payments   that   soon 
ebt.      OUR    RATES    THE 
nice     nvate'  'rEl?MS  THE  EASIEST- 

IHERPE*IS  THE  PLACE, 
99  Nassau  St.,  Room  71 5. 

513*— Cortlandt. 


«&^ 

MY  LOBS 


ee  us;  you. will  receive  the  same 
eatmeat  that  your  employer  get. 

to  Salaried  People, 

116  NASSAU  ST. 


BUSINESS     METHODS     NOW     EMPLOYED.  45 

had  paid  the  entire  amount  of  cash  which  was  received  and  had 
offered  to  pay  interest  at  the  rate  of  60  per  cent  per  annum  upon 
the  same.  The  $5.10  demanded  is  over  300  per  cent  per  annum 
interest.  This  same  employee,  after  he  had  applied  for  the  loan 
and  had  been  assured  of  secrecy,  found  that  a  representative  of 
the  loan  company  had  visited  his  employer  and  very  seriously 
endangered  his  position  by  the  inquiry  made.  (a) 

It  will  be  noted  from  the  advertisements  given  that  Patterson 
&  Company,  Standard  Credit  Company,  and  the  New  Jersey  Fi- 
nance Company  state  the  amount  of  each  weekly  payment  re- 
quired upon  the  different  classes  of  loans.  It  is  impossible  to 
reconcile  the  rates  here  given  with  the  actual  practice  of  the  com- 
panies in  question.  In  no  case  has  it  been  found  that  any  of 
these  companies  permit  a  loan  to  be  repaid  in  the  amounts  inti- 
mated in  the  above  mentioned  advertisements.  Recently  an  ap- 
plication was  made  for  a  loan  at  one  of  these  offices  at  the 
rate  published.  The  manager  replied  that  the  company  never 
intended  to  loan  money  at  those  rates,  that  they  were  only  used 
as  a  means  of  inducing  employees  to  visit  their  office. 

"Come  and  get  all  the  money  you  need,"  "Any  amount  ad- 
vanced," "Money  is  yours  for  the  asking."  The  sincerity  of 
these  statements  may  be  judged  by  the  fact  that  the  amount 
loaned  is  always  based  upon  the  amount  of  salary  received,  and 
that  if  the  employee  does  not  receive  a  satisfactory  salary  it  is 
impossible  for  him  to  secure  a  loan. 

The  advertisements  are  unreliable  in  other  respects  than  those 
already  mentioned.  "Cheapest  rates,"  "lowest  rates,"  "We  lead 
in  low  rates,"  "Our  rates  the  cheapest,"  are  statements  of  the 
different  loan  companies,  yet  competition  is  sufficiently  strong 
to  cause  them  to  guard  their  rates  zealously  from  their  competi- 
tors. A  comparison  between  the  rates  charged  and  these  state- 
ments shows  a  serious  discrepancy.  The  Piermont  Finance  Com- 
pany offers  to  loan  money  "For  one-half  rates  charged  by  other 
loan  companies."  Their  rates  are  practically  the  same  as  those 
of  the  other  companies.  y 

(a)  fe'ee  page  59,  concerning  promise  of  secrecy  in  investigation  made  by 
loan  companies. 


46  SALARY  LOAN  BUSINESS  IN  NEW  YORK  CITY. 

Another  very  effective  method  of  advertising  employed  by 
the  loan  companies  is  ingeniously  worded  personal  letters.  Just 
before  the  holidays  or  vacation  periods,  when  a  special  need  of 
money  is  likely  to  arise,  many  persons  are  in  receipt  of  neatly 
typewritten  letters  calling  their  attention  to  the  fact  that  the 
company  will  be  glad  to  serve  them,  offering  as  a  further  induce- 
ment a  liberal  commission  in  case  they  send  any  new  customers. 
The  following  is  a  letter  received  by  an  employee  of  the  Inter- 
borough  Rapid  Transit  Company: 


,  4000  WORTH 


STANDARD   CREDIT   CO. 

399  BROADWAY.  ROOM  1016 
NEW  YORK 


December  4,  1907. 


Dear  Sir; 

Do  you  know  that  during  the  next  two  or  three  weeks  a 
great  many  worthy  men  will  want  to  make  a  snail  loan  for  the 
Holidays,  and  do  not  know  where  to  go? 

Among  them,  no  doubt,  are  some  of  your  acquaintances, 
and  you  would  be  rendering  them  a  great  favor  by  introducing 
them  to  us,  where  they  know  they  would  be-  squarely  and  honorably 
treated,  and  their  business  kept  absolutely  confidential. 

You  would  also  be  doing  us  a  favor  as  well,  and  we  will 
gladly  reciprocate  by  paying  you  a  commission  of  $3.00  for  each 
lew  customer  you  send  us.  We  prefer  dividing  with  our  friends  and 
giving  them  the-  benefit,  to  spending  the  money  in  advertising, 

During  the  Holiday  season  there  are  so  many  demands  on 
one's  purse,  tha't  it  seems  as  if  nearly  everyone  borrowed  money 
in  either  large  'or  small  amounts,  and  we  would  be  pleased  te 
serve  both  you  and  your  friends.  • 

We  hope  we 'will  be  able  to  pay  you  quito  a  sum  in  com- 
missions for  your  cfcristmas  money; —It  is  worth  trying  for. 


Yours  truly, 


Some  of  the  offices  make  a  specialty  of  loaning  to  women. 
The  following  letter,  addressed  to  women  holding  salaried  posi- 


BUSINESS    METHODS    NOW   EMPLOYED.  47 

tions,  is  representative  of  one  of  the  methods  used  to  secure  pa- 
tronage : 


SALARY 
LOANS 


Jfl 


ricmse 


PRIVATE  OFFICE  KNICKERBOCKER    THEATRE    BUILDING 

FOR  LADIES  ROOMS  1131  AND   1132 

TEU  362-38TH  ST.  No.    14O2    BROADWAY  AND   116  WEST  39TH   ST. 


Dear  Madam :~ 

We  lake  this  method  of  informing  you  that  we  are 
lending  money  to  Ladies  holding  high  class  positions,  on  their 
salaries.  We  will  arrange  the  payments  to  suit  you — weekly 
or  monthly,  and  allow  you  from  3  to  5  months  time. 

Our  rates  are  absolutely  the  lowest  in  the  City  and  your 
business  relations  with  us  will  be  strictly  confidential,  no  one 
will  know  you  borrow,  unless  you  wish  to  tell  them. 

There  will  be  no  questions  asked  any  one  in  reference 
to  your  standing,.  The  Loan  will  be  granted  you  on  application. 

If  not  in  need  of  a  Loan  at  present,  call  at  any  time,, 
and  we  will  be  pleased  to  accommodate  you. 

Trusting  we  may  be  of  service  to  you  in  the  future. 

We  remain, 

Yours  sincerely, 

PIERMONT  FINANCE  COMPANY.. 
(Hiss)  A.  €f.  XTtigJics,  Mffr. 

All  of  the  devices  known  to  the  modern  advertising  world  are 
resorted  to  in  the  matter  of  circulars  which  are  sent  through 
the  mail  to  different  individuals. 

The  following  was  sent  out  by  one  of  the  loan  companies : 


48  SALARY  LOAN  BUSINESS  IN  NEW  YORK  CITY. 

Orrro*  HOOT.. 
a  A..  M.  TO  o  P.  M. 
OPKM   KOONS 

HERON  &  Co. 


TELEPHONE  COCRTLANO  B134 


S9  NASSAU  STREET.  ROOM  715 

NEW  YORK.  K.  Y. 


Dear  Sir:- 

Money  !   Money !   Money^1!   There  is  no  disgrace  in 
being  in  need  of  money,  but  there  may  be  in  not  being  able  to 
get  it.   We  have  it  and  you  can  get  it  very  easily,  for  our  bus- 
iness is  making  small  loans.   We  procure  loans  for  "EVERY  ONE"- 
railroad  men,  c.lerks,  factory  employes,  street  car  men,  office 
employes  and  all  salaried  people.   Your  promise  to  pay  us  is  all 
the  security  we  require.   It  does  not  matter  whether  you  are  married 
or  single,  for  we  never  take  a  mortgage  on  furniture.   We  loan  from 
$10.   to  $£00.   and  you  can  repay  us  in  small  weekly  or  monthly 
payments  to  suit  your  convenience .   OUR  RATES  are  so  low  that  no  one 
should  be  without  money.   All  business  'and  inquiries  are  kept  abso- 
lutely confidential,  and  your  employer  or  fellow  workman  know 
nothing  of  any  transactions  made  with  us.   We  have  brought  happiness 
and  sunlight  to  many  homes  by  loaning  a  man  enough  to  pay  up  many 
scattered  bills  that  were  dragging  him  down.  It  does  not  matter  to 
us  why,  but  if  you  are  in  need  of  money,  call  on  us  to-day.   If 
not,  remember  our  name  and  address. 

Very  respectfully  yours, 

HERON  &  CO. 

P.    S.      We  are  op'en  from  8  A.   M.    to  6  P.   M.      Open  Noons. 

Some  of  the  circulars  are  so  worded  as  to  make  an  especial  ap- 
peal to  the  individuals  who  receive  them.  The  following  circular 
was  received  by  an  employee  when  he  was  so  seriously  involved 
with  several  different  companies  that  an  immediate  loan  was 
necessary  in  order  to  retain  his  position.  Special  attention  is 


BUSINESS    METHODS    NOW   EMPLOYED. 


49 


called  to  the  postscript  at  the  bottom  of  the  circular.  This  in- 
stance is  of  special  importance  because  the  borrower  who  received 
the  circular  was  about  to  be  filed  upon  by  a  broker  (a)  who 
conducts  business  for  the  same  man  as  the  one  who  sent  him 
the  circular.  This  situation  would  seem  to  indicate  that  the 
threat  of  filing  from  one  broker  and  the  receipt  of  the  circular 
from  the  other,  was  a  means  adopted  by  the  employer  (b)  of 
both  of  the  brokers  to  induce  the  same  man  to  continue  an  end- 
less chain  of  borrowing.  The  fact  that  one  man  owns  several 
offices  makes  this  procedure  entirely  possible. 


1907        December        1907 

Sun  Mon  Tue  Wed  Thu  Fri  Sat 
,1234567 
i-  8  9  10  11  12  13  14 
15  16  17  18  19  20  21 
22  23  24  25  26  27  28 
29  30  31 

And  so  you  see  Christmas  is  really  coming, 
«ure  enough.  How  are  you  fixed?  Finan- 
cially, I  mean?  Hope  you  have  a  bank  full 
Of  it  I  Or  at  least  a  safe  denosit  box  fulll 


SALARY   LOANS 

In  case  you  haven't  all  the  money  yoa 
need,  and  find  it  necessary  to  borrow,  I  can 
be  of  service  to  you.  I  am  in  the  business  of 
supplying  money  to  SALARIED  EMPLOYES 
upon  their  NOTES. 

I  can  save  you  time,  trouble,  annoyance  and 
expense.  There  is  not  a  place  in  town  where 
you  can  borrow  money  on  your  salary  so 
cheaply  and  quickly.  All  transactions  are 
strictly  confidential  and  the  terms  of  repay- 
ment are  arranged  to  suit  the  borrower.  There 
is  no  red  tape  in  my  office. 

Customers  settling  accounts  promptly  can 
always  secure  further  accommodations  with- 
out any  delay  whatsoever: 

Don't  borrow  of  friends;  they  don't  like  it 

Don't  lend  to  friends;  it's  bad  business. 

If  your  friends  want  to.  borrow  give  them 
my  address. 

WALTER  GRAHAM, 
Room    1210    American    Tract    Building,  150 

Nassau  Street 

Note  carefully  the  room  number — 1210. 
P.    S.     If  you  have   a   loan   from  another 

lender  and  are  in  trouble,  come  and  see  me.    I 

will  pay  it  for  you. 


It  is  of  interest  to  note,  in  this  connection,  that  the  employee 
who  received  this  most  attractive  circular  secured  a  loan  of 
$13.25,  for  which  he  paid  $25.48  in  six  weeks.  At  first  he  re- 
fused to  pay  the  amount  demanded,  but  a  file  upon  his  wages 
which  cost  him  his  position  compelled  him  to  yield. 


(a)  Howard,  C.  A. 

(b)  H.  A.  Courtright. 


5<D  SALARY  LOAN  BUSINESS  IN  NEW  YORK  CITY. 

Another  method  employed  by  the  loan  companies  to  secure 
business  is  the  services  of  a  solicitor.  The  work  of  the  solicitor 
is  to  become  acquainted  with  men  who  have  loans  and  prospective 
customers,  and  to  use  all  the  influence  possible  to  get  them  to 
patronize  the  company  in  which  he  or  she  is  interested.  In  one 
case  the  solicitor  was  a  foreman  of  a  large  business  concern 
which  employed  several  hundred  men.  The  only  requirement 
necessary  for  the  employees  of  this  concern  to  secure  a  loan  was 
the  recommendation  of  the  foreman,  and  this  recommendation 
was  freely  given,  as  the  foreman  received  a  good  commission 
from  the  loan  company  for  each  new  customer.  In  case  any  of 
the  employees  failed  to  pay,  the  foreman  would  use  his  influence 
to  aid  the  loan  company  in  collecting  the  debt.  In  another  case 
the  timekeeper  of  a  large  concern  was  employed  by  a  certain 
loan  company  and  when  the  agent  from  the  loan  company  called 
to  collect  from  any  of  the  employees,  a  note  to  the  timekeeper 
secured  the  desired  interview.  Without  this  note  it  would  have 
been  impossible  for  the  agent  to  see  any  of  the  employees  during 
working  hours.  The  result  of  such  intimate  relations  between 
the  trusted  employee  of  the  firm  and  the  collectors  of  the  loan 
office  is  illustrated  by  the  statement  of  one  of  the  collectors  that 
in  a  large  establishment  where  the  foreman  and  the  timekeeper 
were  both  in  the  employ  of  the  loan  company  at  least  90  per 
cent  of  the  employees  had  taken  out  loans. 

A  slightly  different  phase  of  the  work  of  the  solicitor  is  illus- 
trated by  the  case  (a)  of  the  private  secretary  to  the  treasurer 
of  a  large  transportation  company,  who  was  recently  discharged 
because  of  his  connection  with  the  loan  companies.  When  an 
employee  from  this  company  applied  for  a  loan,  a  copy  of  the 
application  would  be  sent  to  this  private  secretary.  He  would 
investigate  the  employee's  record  with  his  company  and  the 
amount  of  wages  he  received,  and  would  return  the  application 
to  the  loan  office  either  approved  or  disapproved.  The  loan  com- 
pany informed  him  when  a  payment  was  made  and  in  case  the 
employee  did  not  meet  his  obligations  promptly  he  would  imme- 
diately receive  a  letter  from  the  private  secretary,  stating  that  a 

(a)   See  page  27. 


BUSINESS   METHODS   NOW   EMPLOYED.  51 

file  had  been  placed  upon  his  wages  and  unless  the  matter  was 
settled  at  once  the  employee  would  be  discharged.  In  case  an 
employee  would  attempt  to  collect  his  wages  and  disappear  with- 
out paying  the  loan  company,  he  would  find  that  he  had  been 
discovered  and  that  the  private  secretary  had  notified  the  loan 
company.  In  case  there  was  not  sufficient  time  for  the  loan  com- 
pany to  place  a  file  upon  his  wages  the  private  secretary  would 
notify  the  treasurer  that  he  had  received  such  a  file  or  would 
fill  out  one  of  the  blanks  himself  with  which  the  loan  company 
kept  him  supplied.  The  letters  which  passed  between  him  and  the 
loan  companies  were  in  cipher  in  order  to  obviate  any  possibility 
that  his  employer  would  know  of  the  transaction.  The  position  of 
private  secretary  to  the  treasurer  made  it  possible  for  this  em- 
ployee to  secure  the  desired  information  about  each  employee. 
He  was  the  one  who  received  the  file  upon  an  employee's  wages 
and  this  fact  made  it  easy  for  him  to  force  the  unfortunate  em- 
ployee to  pay  the  loan  company  whatever  it  demanded.  His 
commission  from  a  single  company  (a)  for  the  month  of  August, 
1907,  was  $22.80.  It  is  the  belief  of  a  personal  friend  of  his 
that  practically  all  of  the  different  loan  companies  in  the  city 
were  paying  him  a  commission  of  six  per  cent  upon  the  amount 
of  each  loan. 

The  practice  of  paying  persons  who  already  have  loans  a  com- 
mission of  from  one  dollar  to  three  dollars  for  each  new  cus- 
tomer is  very  common.  The  commission  in  each  case  is  deducted 
from  the  weekly  payment.  One  company  has  devised  a  unique 
system  of  coupons,  (b)  a  book  of  which  is  given  to  each  of  its 
customers.  The  coupons  have  corresponding  numbers  and  the 
customer  signs  his  name  to  one  of  the  coupons,  deposits 
it  with  the  company  and  gives  the  prospective  borrower  the  cor- 
responding one.  When  the  new  loan  is  made  the  amount  of 
the  commission  is  credited  to  the  name  having  the  number  cor- 
responding to  the  one  turned  in  by  the  new  customer.  It  is  the 
opinion  of  a  manager  of  a  loan  office  that  the  system  of  paying 
commissions  for  new  customers  is  the  most  effective  method  of 
securing  business. 

(a)  A  statement  prepared  by  the  manager  from  the  books  of  the  company 
is  one  file  in  the  Bureau  of  Social  'Research. 

(b)  Heron  &  Company. 


~     >.    O     >*   <£ 


rt 
c/l 
<U     C 

TJ 
rt     C 


5  X 

C  cj 

O-  *- 

— ,  C 

3  c 


o         _ 


i     S. 


s-g  «rr 

1  ^  "s 
s  ^  ^ 

~  *  £  £ 

rt    **•»  ~-    u 


s  .i:  ~  |  |  3 
^*  ft  JS  .2  e  *; 


vii  ;  ^_  a 


-     c 
-•    2 


-    ~    r    ii.  c 


"*>    .— 
\)    j^ 

S    o 


B 


_Z  X      C 


J^    ™     C  ^ 

TJ  S  °  o  b  a 

*•"*             C  ^ 

r.     C    *"*  *i  ^  2 

»  "O  *-  g  -j 

o  >>  n  ^  ^  ^ 


S     CJ 


§  s  «  S  'g 


^^    rt  ^    C  ^ 

£  ^  X  °  I  'I 

?  ~    S  'U    2    rt 


O   *3    S 

^     -   _c 


3     o' 

o  •*-* 


J3     5    W 
^     V>   {/j 

w 


—     rt     r->    *^     W     o  te     en   ^p, 
'•—C       -    O     r1     r-     n  T!   >"M 


frS 


o   ., 

T3 


?  s  s-g 
§  •§  -  2  x 

«    rt   I   g  W 


coc.t:^^^^ 

|5|  is'i«^ 

^  '* » r/>  if-s's 


c  > 


•^   o 

^  XI 
tc  rt 
c  p 


g  S  2   £  ^ 


I    '^    —      *      c     " 


tc  s    -' 
c   r,    - 


~~~    _O     c/i    "*"     C     ~^     C     J  i 


c    c  £   c 
S  £  *v 

i|:i 


w  S  'e  i» 


M     V  ••>•  < 

CJ     *^^    ^     O 

&c  z«*  .i^  *-> 

rt    5    t/i      ^ 
^     ro     <U     (rt 

g  •§   o  ^ 

2  ^  f  oT 

j_i    rt    c 

fcJD   O     |J>     fc 

^rt  >•  I  rt 

^  "7v       ^ 

^  g.s  S 

^  i!  rg   tl 

&c  $   2  _| 

CflJ      C    >-*•-« 
^     ^  O 

S  °<£g 
<«  ^  c  .? 

o 


r 


o 
ct 


e 


\  g  g  c 

i>  rt    rt  rt 

c  be     .  t> 

S  s  •?.  1 


I     -Hi 


a  £  S 

I  §  " 

B  *5 

O  -3    ~ 


-g 
11 

lj 

:ement  or  a 

tw 

1> 

;/; 

rt 
u 

C 

5signment  < 
>rney  are  h 
>f  the  same 

>-, 
c 
rt 

''c 
<u 

CD 

w 

E 

H 

W 

_> 

SJGNMEN 

PLOYED, 

O  & 

<: 

H  W 
£  E 
r~>  £-< 

her  attornt 

8 

IN 

O 

o 

"O 
5*. 

rt 

ctf 

•o 

r  s 

-o   u 

1*8 

o^ 

s^ 

O    *j 

f3 

c  ^ 

1 1 

^  fc 

•0  2 

§^ 

§1 

O  w  . 
c  -r  t> 
^  *  E 


J  ts-s?  i  S'sS^SSf  II 


P-  H  •?.  t   „,  W 


c  **• 
'o   " 


aj    rttiti    ^    P  "5  *^    *--OtI'fc""'C2l-'«->    U  *3 

•••••8*5*'  .-•''"*"    ^*^:  *""     C     S 


X         a: 

•^     X 


BUSINESS  METHODS  NOW  EMPLOYED.  53 

Almost  invariably  these  offices  require  from  one  to  three 
endorsers.  The  manner  in  which  these  endorsers  are  often  se- 
cured is  significant.  The  only  paper  which  the  endorser  is 
required  to  sign  is  the  Agreement  and  Power  which  faces  this 
page. 

When  the  applicant  is  told  he  must  secure  endorsers  he  calls 
upon  his  friends  and  assures  them  it  means  nothing  more  than 
a  recommendation  so  that  he  can  secure  the  money.  The  agent 
of  the  loan  company  calls  immediately  upon  the  consenting  friend 
with  a  copy  of  the  Agreement  and  Power  which  he  is  asked  to 
sign.  The  agent  assures  the  endorser  that  the  paper  means  prac- 
tically nothing  and  that  it  is  only  a  recommendation  for  his  friend 
in  order  that  he  may  secure  the  money.  This  is  shown  by  the 
following  affidavit : 

CITY  AND  COUNTY  OF  NEW  YOBK,  ss.: 

GEORGE  A.  KAY,  being  sworn  deposes  and  says:  that  I  reside  at  No. 
1116  Nelson  Avenue,  Highbridge,  City  of  New  York.  That  on  the  llth 
day  of  December,  1907,  a  man  called  upon  me  at  my  place  of  business, 
55  White  Street,  the  office  of  the  American  Mills  Company,  where  I 
am  employed.  That  he  showed  me  a  certain  paper  and  asked  me  to 
sign  my  name  thereto;  he  said  that  the  paper  was  of  no  legal  import- 
ance; that  the  entire  matter  or  transaction  was  a  matter  of  form; 
that  I  was  just  attesting  to  the  good  character  of  William  Richardson; 
that  he  had  said  paper  placed  upon  the  flap  of  a  wallet  and  that 
as  I  began  to  read  it  he  withdrew  said  paper  and  discouraged 
any  further  attempt  on  my  part  to  read  same  and  that  he  re- 
peated it  was  but  a  matter  of  form;  at  no  time  was  the  paper  taken 
out  of  his  hands.  That  at  no  time  when  said  man  was  at  the  office 
of  the  American  Mills  Company,  did  he  tell  me  the  paper  to  which  I 
was  to  put  my  name  to  was  a  Power  of  Attorney;  that  I  was  offering 
my  wages  as  security  for  a  loan  made  by  some  loan  company  to  said 
William  Richardson.  At  no  time  did  said  person  tell  me  that  if  Rich- 
ardson did  not  repay  the  loan  made  to  him  by  the  loan  company  that 
I  would  have  to  pay  that  loan  out  of  my  wages.  That  I  did  not  know 
that  the  instrument  I  was  signing  was  a  Power  of  Attorney.  That 
said  person  was  about  five  feet  five  inches  in  height,  of  medium  weight, 
dark  hair,  of  florid  complexion,  that  he  had  a  small  mustache. 

GEORGE  A.  KAY. 
Sworn  to   before    me    this  | 
12th  day  of  March,  1908.  j 

BERNARD  ROBINSON, 
Com.  of  Deeds, 
N.  Y.  C. 


54  SALARY  LOAN  BUSINESS  IN  NEW  YORK  CITY. 

With  this  assurance  and  with  the  Agreement  and  Power  pre- 
sented in  such  folded  form  as  to  show  only  the  portion  repro- 
duced in  the  cut  facing  this  page  the  signatures  of  the  desired 
number  of  endorsers  are  secured. 

The  applicant  also  signs  a  power  of  attorney.  (a)  The 
money  is  not  advanced  by  the  office  from  which  the  employee 
supposed  he  was  borrowing,  but  a  check  is  received  from  H.  A. 
Courtright  of  Providence,  R.  I.,  and  enclosed  with  the  check  is 
a  memorandum  (b)  stating  that  the  said  Courtright  has  bought 
a  certain  number  of  notes  giving  the  amount  of  each  and  date 
when  due.  The  notes  have  been  signed  by  the  attorney  (M. 
Wilmarth)  whom  the  borrower  authorized  to  sign  his  name  to 
any  legal  document  by  signing  the  power  of  attorney.  The  bor- 
rower does  not  see  the  notes  and  therefore  has  no  idea  of  what 
they  contain.  Each  of  these  notes  (c)  signed  by  the  attorney 
contains  the  following  clause:  "Interest  from  and  after  date 
of  maturity,  two  per  cent  per  month  or  fraction  of  a  month"  also, 
"This  note  is  one  of  a  series  dated  this  day  and  signed  by  me, 
and  I  agree  that  if  this,  or  any  one  of  said  series,  is  not  paid 
by  me  on  the  date  when  due,  that  each  and  every  one  of  said 
notes  become  forthwith  due  and  payable  on  said  date  of  first 
default  .  .  ."  The  notes  are  payable  in  Providence,  and  if 
the  borrower  succeeds  in  getting  the  money  to  Providence  each 
week  on  time,  when  the  notes  are  paid  the  debt  is  canceled.  If, 
however,  the  money  fails  to  reach  the  office  of  H.  A.  Courtright 
upon  the  date  when  the  note  becomes  due,  according  to  the  clause 
in  the  note  all  of  the  series  become  due  immediately,  and  a 
protest  fee  and  also  a  collection  fee  are  due  upon  each  note. 
This  occurs  so  frequently  that  one  is  inclined  to  believe  that  the 
protest  fee  and  the  collection  fee  are  only  a  device  used  to  collect 
a  higher  rate  of  interest  on  each  loan.  A  few  illustrations  will 
show  the  manner  in  which  circumstances  are  taken  advantage  of 
to  secure  the  additional  charge.  In  case  I  the  post-office 
order  was  sent  the  day  preceding  the  date  when  the  pay- 
ment was  due.  For  some  reason  it  failed  to  reach  the  office  in 

(a)  See  Appendix  III,  page  97. 

(b)  For  copy  of  memorandum,  see  Appendix  XIV,  page  114. 

(c)  For  copy  of  note,  see  Appendix  XIII,  page  113. 


c    ^ 
<u    ~ 


- 


o 


X    u 
c  1 


c    :, 
:;    S 


c   ** 

rt    oj 

I  8- 


&•« 

S)S 

•§•5 


BUSINESS   METHODS   NOW  EMPLOYED.  55 

Providence  the  next  day.  In  case  2,  when  the  borrower 
received  the  check  from  Mr.  Courtright  he  could  not  get 
it  cashed  and  it  was  returned  to  Providence.  The  money  was  not 
received  for  several  days  after  the  date  when  the  check  was  first 
sent  to  him.  He  reasoned  that  his  first  payment  would  be  one 
week  from  the  time  he  received  the  money,  but  he  learned  too 
late  that  the  first  payment  was  due  one  week  from  the  day  the 
check  was  sent  from  Providence.  Case  3  was  that  of  a  borrower 
ignorant  of  methods  of  sending  money  and  when  the 
post-office  order  was  secured  he  sent  the  receipt  instead  of  the 
order  itself.  This  caused  a  delay  for  which  he  paid  the  regular 
protest  and  collection  charges.  Case  4  was  that  of  a 
borrower  who  expected  to  pay  the  weekly  amounts  at  the  office 
where  the  application  for  the  loan  was  made.  Upon  the  day 
when  the  first  payment  should  have  been  made  he  went  to  the 
office  expecting  to  pay  the  amount  due,  but  was  informed  that 
all  payments  were  to  be  made  in  Providence,  R.  I.  For  this 
reason  his  remittance  reached  Providence  a  day  late  and  the  usual 
charges  were  imposed. 

The  Coast  Cities  Collection  Company,  No.  132  Nassau  St., 
managed  by  E.  C.  Nowlin,  makes  the  collections  for  H.  A.  Court- 
right.  If  the  money  does  not  arrive  in  Providence,  R.  I.,  upon 
the  date  when  it  is  due  Mr.  Nowlin  serves  notice  upon  the  em- 
ployee the  next  morning  that  his  note  has  been  protested  (a)  and 
the  protest  and  collection  charges  must  be  paid  at  once  or  the 
assignment  of  wages  will  be  presented  to  his  employer.  Mr. 
Nowlin  does  not  hesitate  to  register  the  assignment  of  wages 
with  the  employer  although  in  several  cases  recently  investigated 
such  registration  seriously  interfered  with  the  position  of  the 
employee. 

A  few  illustrations  will  aid  in  understanding  the  method  of 
business  as  conducted  by  the  Coast  Cities  Collection  Company. 
Case  i :  (b)  an  employee  of  a  laundry  in  the  Bronx  se- 
cured a  loan  from  a  lender  whom  he  supposed  to  be  Howard,  No. 
73  West  nth  Street,  but  found  that  he  received  a  check  from  H. 
A.  Courtright,  Providence,  R.  I.  He  met  all  of  the  payments  upon 

(a)  For  copy  of  Protest,  see  Appendix  XII,  page  113. 

(b)  Receipts,   copy  of  file,  memorandum  and  other  papers    concerning    the 
case  on  file  in  office  of  Bureau  of  Social  Research. 


56  SALARY  LOAN  BUSINESS  IN   NEW  YORK   CITY. 

the  loan.  The  very  day  he  paid  the  last  one  his  employer  received 
a  file  upon  his  wages  for  $24.66.  His  first  endorser,  a  man  who 
had  worked  in  the  same  position  for  twenty  years,  was  notified 
by  his  employer  that  an  assignment  of  wages  had  been  made 
by  him  and  that  the  company  would  not  sanction  such  action. 
The  man  was  very  much  surprised  and  said  he  had  made  no 
assignment  of  his  wages  and  that  the  only  connection  he  had 
with  any  loan  company  was  that  he  endorsed  for  his  friend  but 
was  certain  that  the  friend  had  paid  the  debt  in  full.  This  ex- 
planation did  not  release  him  however  from  a  most  humiliating 
censure  from  the  manager  of  the  factory.  The  employee  sought 
the  services  of  the  Legal  Aid  Society,  and  when  a  representative 
from  that  organization  called  upon  the  cashier  of  the  factory  he 
found  that  a  file  had  been  made  upon  the  wages  of  the  first 
endorser  on  the  same  date  and  for  the  same  amount  as  the  one 
which  had  been  registered  against  the  wages  of  the  borrower. 
The  same  day  the  second  endorser  called  upon  the  Legal  Aid 
Society  and  said  his  wages  had  been  filed  upon  and  he  also  was 
in  danger  of  losing  his  position.  He  assured  the  agent  of  the 
Legal  Aid  Society  that  he  had  never  made  such  an  assignment 
of  his  wages  and  his  only  knowledge  of  any  possible  action  was 
his  endorsement  for  his  friend,  who  he  was  positive  had  made 
his  payments  in  full.  The  assignment  was  sent  to  his  employer 
the  same  day  and  was  for  the  same  amount  as  the  other  two 
previously  mentioned.  Mr.  Nowlin  of  the  Coast  Cities  Collection 
Company  was  consulted  and  asked  the  reason  for  endangering 
the  positions  of  the  three  different  men  when  the  debt  had  been 
paid  in  full  as  was  shown  by  the  receipts.  He  replied  that  one 
of  the  payments  had  not  been  made  on  time  and  that  he  de- 
manded $5.22  protest  and  collection  fees.  Why  he  had  filed 
upon  three  different  employees  upon  the  same  date  for  $24.66 
each  in  order  to  collect  $5.22  was  left  unexplained.  Case  2: 
An  employee  of  the  New  York  Central  Railroad  secured  a  loan 
from  one  of  the  brokers  of  H.  A.  Courtright  and  was 
unable  to  send  the  money  to  Providence  the  day  it  was  due  as 
he  did  not  receive  his  salary  until  the  afternoon  of  the  same  day. 
The  next  morning  he  was  visited  in  his  place  of  business  by  an 


BUSINESS  METHODS  NOW  EMPLOYED.  57 

agent  of  the  Coast  Cities  Collection  Company  and  told  that  unless 
he  made  the  payment  at  once  and  $5.22  additional  charges  his 
company  would  be  notified  of  the  assignment  of  wages.  This 
seemed  unreasonable  to  the  employee  but  knowing  that  if  the 
assignment  of  wages  was  delivered  to  the  company  he  would 
be  discharged,  he  paid  the  amount  demanded.  Case  3: 
An  employee  of  the  Interborough  Rapid  Transit  Company 
secured  a  loan  which  was  endorsed  by  a  friend.  The  money 
was  not  received  at  Providence  when  due  and  the  company 
was  notified  of  the  assignment  of  wages  made  by  the  two 
employees.  The  borrower  was  discharged.  The  endorser 
advanced  $4.00  extra  costs  plus  the  amount  of  the  payments 
agreed  upon  and  secured  a  release  of  the  assignment.  About  two 
months  afterwards  Mr.  Nowlin  placed  a  file  upon  the  wages 
of  the  endorser  for  $11.98.  This  seriously  endangered  his  po- 
sition as  it  was  the  second  file  from  the  same  company  and 
seemed  to  indicate  that  he  had  secured  a  second  loan.  When 
Mr.  Nowlin  was  consulted  he  said  that  he  always  filed  for  $10.00 
more  than  the  amount  due,  and  in  case  the  employee  did  not 
pay  the  $10.00  it  was  charged  as  a  collection  fee  from  the  com- 
pany. The  $1.98  was  extra  charges  on  the  previous  loan  upon 
which  he  had  already  paid  $4.00.  Thus  for  a  loan  of  $20.00  for 
one  month  this  endorser  had  paid  $5.00  interest  and  $5.98  extra 
costs  and  in  addition  had  his  position  endangered  upon  two  oc- 
casions. 

Another  method  used  by  Mr.  Nowlin  in  collecting  for  H.  A. 
Courtright  is  to  send  a  personal  letter  to  the  employer  after  he 
has  received  the  assignment  of  wages.  In  most  cases  the  em- 
ployer is  very  reluctant  to  assist  his  employee  after  one  of  these 
letters  has  been  received.  A  case  in  point  is  that  of  a  manufactur- 
ing establishment  in  the  city  the  cashier  of  which  had  decided 
to  assist  an  employee  and  had  sought  legal  advice.  When  a  let- 
ter, a  copy  of  which  appears  on  the  following  page,  was  received 
by  the  cashier  of  the  company.  Upon  receipt  of  the  letter  he 
decided  to  drop  the  matter  as  the  employee  had  no  legal  grounds 
for  complaint,  although  he  had  paid  $18.00  for  a  loan  of  $13.25 
for  six  weeks  and  Mr.  Nowlin  was  demanding  more. 


58  SALARY  LOAN  BUSINESS  IN   NEW  YORK  CITY. 

We  hustle  while  others  loaf 

The  harder  they  are  the  better  we  like  them 

COAST    CITIES    COLLECTION    CO. 
(Incorporated) 

COLLECTIONS  OF  ALL  KINDS. 

Metropolitan  Office,  132  Nassau  St.,  Room  318, 
E.  C.  Nowlin,  Manager. 

NEW  YORK  CITY,  February  15,  1908. 

Bros., 

New  York. 

Gentlemen. — Mr.  H.  A.  Courtright  of  Providence,  Rhode 
Island,  has  placed  in  our  hands  for  collection  a  claim  against  you 
for  wages  earned  and  assigned  to  him  by  one  of  your  em- 
ployees. 

As  it  is  generally  understood  by  all  attorneys  that  an  assign- 
ment of  wages  is  good,  we  suggest  that  you  place  this  matter 
in  the  hands  of  your  attorney,  and  let  us  refer  him  to  a  number 
of  similar  cases,  where  we  have  sued  for  Mr.  Courtright  and 
invariably  won,  some  of  the  cases  being  appealed  and  judgment 
affirmed.  Most  of  these  cases  were  against  big  and  well-known 
New  York  corporations. 

We  write  this  in  the  hope  of  effecting  a  settlement,  without 
the  unnecessary  trouble  and  annoyance  to  you  and  to  us,  of  a 
law  suit.  Or  perhaps  the  employee  himself  would  relieve  you  of 
this  matter  upon  a  suggestion  from  you. 

Very  truly, 

COAST  CITIES  COLLECTION  COMPANY, 

per 

The  business  methods  of  the  other  salary  loan  companies  in 
New  York  City  are  materially  different  from  those  which  have 
been  described.  The  money  is  secured  in  the  same  office  in  which 
the  application  is  made,  payments  are  made  in  the  same  office, 
collections  are  almost  always  made  by  the  same  company,  and 
it  is  very  seldom  that  extra  charges  are  imposed. 


c, 

BUSINESS  METHODS  NOW  EMPLOYED.  59 

The  applicant  is  required  to  answer  a  large  number  of  ques- 
tions (a)  concerning  himself  and  his  position.  His  case  is  thor- 
oughly investigated  and  if  the  company  feels  he  is  a  good  risk 
the  loan  is  made.  If  not  he  is  either  rejected  or  is  asked  to  secure 
an  endorser. 

The  attitude  of  the  loan  company  toward  this  investigation 
is  important  as  explaining  the  fact  that  so  many  employees  bor- 
row money  from  this  class  of  money  lenders  when  they  are 
aware  that  if  their  employer  knew  of  the  transaction  they  would 
lose  their  positions.  Recently  two  young  men  called  at  the  office 
of  Mr.  Daniel  Weber,  No.  no  West  34th  St.,  one  of  whom  ap- 
plied for  a  loan.  When  he  asked  about  the  investigation  that 
would  be  made  the  man  in  charge  stated  that  they  had  a  secret 
system  by  which  no  one  would  ever  know  that  he  had  applied 
for  a  loan,  that  none  of  the  references  would  be  personally  vis- 
ited or  written  to,  but  that  the  facts  would  be  ascertained.  (b) 
When  the  impossibility  of  securing  information  without  inquiry 
was  suggested  the  manager  replied  :  "That  is  a  secret  of  the  busi- 
ness and  you  pay  us  our  rates  and  we  guarantee  you  that  no  one 
shall  ever  know  anything  about  this  loan  or  anything  about 
the  fact  that  you  applied  here  for  a  loan."  This  assurance  is 
very  effective  with  the  ordinary  employee. 

An  ingenious  method  is  employed  by  some  of  the  companies 
to  verify  both  the  home  address  and  the  business  address  of  the 
applicant.  Two  letters  are  sent  at  the  same  time,  one  to  each 
address,  and  the  applicant  must  present  them  both  on  the  fol- 
lowing day  in  order  to  secure  the  loan. 

Any  general  characterization  of  the  treatment  of  the  bor- 
rower by  the  different  loan  companies  would  be  unjust.  Some 
of  the  companies  are  very  considerate  and  do  all  they  can  to  help 
the  borrower  and  only  as  a  last  resort  use  the  assignment  of 
wages  as  an  aid  in  collection.  Several  cases  have  been  investi- 
gated in  which  the  loan  companies  waited  for  several  weeks 
for  the  regular  payments  and  made  no  extra  charge  for  the  delay. 
In  one  case  the  borrower  was  several  weeks  behind  in  his  pay- 

(a)  For  copy  of  Application  Blank,  see  Appendix  I,  page  93. 

(b)  See  page  45,  concerning  investigation  of  an  employee. 


6O  SALARY  LOAN  BUSINESS  IN   NEW  YORK  CITY. 

ments,  which  were  $2.25  each.  The  loan  company  agreed  to 
accept  $2.00  per  week  from  date  until  the  amount  was  paid.  The 
man  had  not  been  "hounded"  in  his  business  nor  had  he  received 
other  than  courteous  treatment.  In  another  case  the  borrower 
was  several  weeks  in  arrears  in  his  payments  and  the  company 
had  addressed  several  very  courteous  letters  to  him,  none  of 
which  he  had  answered,  and  as  a  last  resort  the  following  letter 
was  sent: 


W.    R.    HERON 

GENKRAL  BROKKR 


NEW  YORK,  N.  Y. 

//_  /?0* 


09     NASSAU     STREET 


Dear  sir;- 

Sometime  ago  you  were  notified  that  your  account  at  this 
office  was  IK  ARREARS. 

We  East  now  insist  that  you  give  same  your  IMMEDIATE 
attention. 

Not  receiving  any  reply  to  our  former  letter,  we  are  forced 
to  believe  that  you  are  trying  to  AVOID  paying  us  this  money. 

Ve  desire  an  AMICABLE  adjustment  of  the  account,  but  if 
you  persist  in  MQK  ATTENTION  to  our  notices,  we  shall  be  compelled 
and  feel  justified  in  resorting  to  other  means  to  get  our  money. 

We  have  treated  you  COURTEOUSLY  in  this  matter  and  only  .ask 
for  like  treatment  in  return. 

If  we  do  not  hear  from  you  within  the  next  three  days,  we 
shall  certainly  insist  on  FULL  settlement  of  ENTIRE  claim  at  once. 

Yours  Respectfully* 


Some  of  the  companies,  on  the  other  hand,  seem  to  be  anxious 
to  cause  the  individual  employee  all  the  trouble  possible.  If  he 
is  a  single  day  late  in  his  payment,  a  letter,  a  telephone  call  and 
a  personal  visit  from  the  agent  are  all  forthcoming.  One  com- 


BUSINESS  METHODS  NOW  EMPLOYED.  6l 

pany  sent  its  agent  every  week  to  call  upon  a  young  man  who 
was  seriously  ill  with  typhoid  fever,  and  the  instructions  from  the 
owner  of  the  company  were  to  threaten  him  that  if  he  did  not 
secure  the  money  and  make  his  payments  at  once  his  family  and 
his  employer  would  be  notified  of  his  refusal  to  pay.  The  col- 
lector from  the  same  company  returned  to  the  office  at  another 
time  and  reported  that  a  certain  customer  was  unable  to  meet  his 
payment  but  would  pay  the  following  week  if  the  company  would 
not  notify  his  employer.  He  told  the  collector  that  if  his  em- 
ployer was  notified  he  would  lose  his  position  and  it  would  be 
impossible  for  him  to  bear  the  strain  as  his  family  knew  nothing 
about  his  financial  affairs.  He  further  stated  that  if  he  should 
lose  his  position  the  only  course  open  to  him  was  suicide.  When 
the  collector  reported  these  facts  to  the  owner  of  the  company 
she  (a)  said  if  he  committed  suicide  they  would  close  the  office  a 
day  and  all  attend  the  funeral  but  that  the  employer  would  be 
notified  unless  he  paid  the  next  day. 

A  very  important  employee  of  the  salary  loan  offices  is  the 
individual  called  a  "Tracer."  It  is  the  duty  of  this  person  to 
"locate"  customers  of  the  loan  company  who  have  lost  their  posi- 
tions through  an  assignment  of  wages  or  who  for  any  other  rea- 
son change  their  employment.  The  work  of  this  employee  is 
known  in  loan  circles  as  "hunting  skips."  The  effectiveness  with 
which  his  work  is  executed  is  shown  in  the  case  of  a  telegraph 
operator  who  was  located  by  the  tracer  in  four  successive  posi- 
tions in  New  York  City  all  of  which  he  lost  because  of  an  as- 
signment of  wages  filed  upon  the  different  employers  by  the 
same  loan  company.  In  despair  he  went  to  Cuba  only  to  be 
discovered  there  after  a  few  weeks.  A  file  was  immediately 
placed  upon  his  wages  and  he  was  discharged. 

The  entire  transaction  with  a  salary  loan  company  is  sur- 
rounded with  secrecy.  It  is  impossible  in  most  cases  to  know 
who  owns  the  office,  to  secure  a  copy  of  the  papers  which  the 
applicant  signs,  to  secure  the  rates  charged,  or  to  ascertain 
the  amount  of  cash  received  on  an  individual  loan. 

One  of  the  managers  when  asked  why  the  business  was  car- 
ried on  so  secretly  and  why  the  inside  office  was  always  inacces- 

(a)  Only  case  found  in  the  investigation  in  which  the  office  was  owned  by 
a  woman. 


62  SALARY  LOAN  BUSINESS  IN   NEW  YORK  CITY. 

sible  to  an  outsider,  replied:  "My  boss  don't  want  anybody  to 
know  who  he  is.  You  know  he  lives  in  a  wealthy  part  of  the 
city  and  he  wouldn't  have  any  of  his  friends  know  he  was  in  this 
business  for  the  world.  The  reason  we  have  the  inside  office 
locked  and  never  permit  any  stranger  to  come  in  is  we  are  afraid 
some  detective  from  Mr.  Jerome's  (a)  office  would  come  some 
time  and  take  our  papers  and  books.  Whenever  we  have  any 
suspicion  of  anyone  we  always  lock  all  the  papers  and  books  in 
the  safe.  We  never  give  our  rates  to  anyone  until  we  make  the 
loan  and  we  never  permit  anyone  to  see  the  papers  the  customers 
sign.  We  must  be  very  careful  about  our  business  or  we  might 
all  get  put  in  jail  like  the  girls  did  a  few  years  ago  when  the 
District  Attorney  drove  all  the  salary  loan  offices  out  of  New 
York  City." 

Several  attempts  have  been  made  by  different  employees  who 
had  paid  their  loan  in  full  to  secure  the  papers  they  had  signed 
but  this  has  been  refused  in  every  case.  A  receipt  is  given  can- 
celing the  bill  of  sale,  the  signature  is  torn  from  any  papers 
which  the  borrower  has  signed  and  the  papers  are  destroyed. 

The  offices  are  almost  exclusively  in  charge  of  women  and 
girls.  Several  reasons  are  given  for  this  situation,  a  very  im- 
portant consideration  being  that  it  is  cheaper.  Another  im- 
portant reason  is  that  D.  H.  Tolman  who  owns  offices  in  sixty- 
three  different  cities,  has  made  it  his  custom  for  several  years  to 
hire  young  women  and  in  so  doing  they  have  learned  the  busi- 
ness. The  result  has  been  that  in  nearly  every  case  when  a  new 
loan  office  has  been  opened  in  the  city  the  owner  has  secured  the 
services  of  one  of  Tolman's  experienced  managers.  This  has 
been  a  source  of  much  trouble  to  Mr.  Tolman,  who  has  tried 
several  plans  to  keep  his  employees  from  leaving  him  and  work- 
ing for  a  competitor.  He  insists  as  a  condition  of  employment 
that  each  new  employee  sign  an  agreement  that  she  will  not 
reveal  the  secrets  of  his  business  and  will  not  enter  the  employ  of 
any  individual  doing  a  similar  business  for  a  period  of  two  years 
after  the  termination  of  her  contract  with  him.  The  contract  is 
extremely  binding  and  is  so  worded  that  the  salary  is  considered 

(a)    District  Attorney  of  New   York  County. 


BUSINESS  METHODS  NOW  EMPLOYED.  63 

compensation  for  services  rendered  and  for  keeping  the  aforesaid 
agreement.  Some  have  suggested  that  the  women  managers  are 
employed  in  order  to  avoid  friction  with  angry  customers.  It 
would  be  very  difficult  indeed  for  the  customers  to  refrain  from 
physical  violence  if  they  were  treated  by  a  man  as  they  are  often 
treated  by  the  women  managers,  although  it  must  be  said  that 
the  women  in  charge  of  some  of  the  offices  are  most  courteous. 

A  common  practice  of  the  salary  money  lender  is  to  open  a 
new  office  under  a  different  name  when  the  business  in  the  old  of- 
fice has  reached  a  certain  volume.  This  is  illustrated  in  the  case 
of  S.  Carr  Carroll  of  Chicago  who  opened  an  office  in  August 
under  the  name  of  Carr  &  Company  and  in  November  opened 
another  office  under  the  name  of  Moore  &  Company.  This  ex- 
plains the  fact  that  several  of  the  largest  offices  are  controlled 
by  the  same  individual. 

In  scarcely  any  case  is  the  name  of  the  owner  publicly 
connected  in  any  way  with  the  office.  A  firm  name  is  used  and 
in  case  an  individual  name  is  necessary  it  is  generally  the  name 
of  the  manager  or  some  woman  in  his  employ.  A  few  illustra- 
tions will  show  the  different  methods  used  to  conceal  the  real 
owners  of  the  different  offices. 

One  of  the  firms  operating  under  the  name  of  L.  G.  Smith 
is  on  record  at  the  County  Clerk's  office  under  date  of  August 
31,  1906,  as  follows:  "I,  Cora  E.  Raynor,  do  hereby  certify 
that  I  am  about  to  conduct  or  transact  business  under  the  name 
of  L.  G.  Smith  and  I  further  certify  that  the  true  and  full 
name  of  the  person  about  to  conduct  or  transact  the  same  is  as 
follows:  Cora  E.  Raynor,  No.  43  Nelson  Place,  Newark,  N. 
J."  Miss  Raynor  is  known  to  be  an  employee  of  Mr.  L.  B. 
French  (a)  of  Chicago,  who  also  owns  the  office  doing  business 
at  No.  116  Nassau  Street,  under  the  name  of  Mason  Financial 
Company  and  managed  by  Miss  Heavey.  The  firm  of  Wells 
&  Company  is  explained  by  the  following  document  on  file  in 
the  County  Clerk's  office  under  date  of  June  5,  1905:  "I, 
Arthur  W.  Connable,  do  hereby  certify  that  I  intend  to  conduct 
or  transact  the  business  of  buying  choses  in  action  under  the 

(a)  The  name  of  Mr.  French  was  obtained  from  one  of  his  employees. 


64  SALARY  LOAN   BUSINESS  IN   NEW  YORK   CITY. 

name  of  Wells  &  Co."  Similar  documents  in  the  County  Clerk's 
office  reveal  the  fact  that  the  same  A»  W.  Connable  is  also 
doing  business  under  the  name  of  Standard  Credit  Company, 
Harper  Realty  Company,  and  Patterson  and  Company,  each 
of  which  is  doing  a  large  business.  When  the  manager  of  one 
of  these  offices  was  asked  if  this  connection  did  not  exist  she 
positively  denied  it.  She  said  there  was  absolutely  no  connec- 
tion between  the  companies  enumerated. 

The  real  owner  of  the  New  Jersey  Finance  Company  is 
shown  by  the  following  sworn  statement  under  date  of  Febru- 
ary 28,  1907:  "I,  Mary  I.  Sherman,  do  hereby  certify  that 
I  intend  to  conduct  and  transact  the  business  of  Loan  Broker 
under  the  name  of  the  New  Jersey  Finance  Company."  Miss 
Sherman  was  formerly  an  employee  of  D.  H.  Tolman. 

The  ownership  of  the  Federal  Discount  Company  is  some- 
what more  complicated,  but  evidence  is  at  hand  which  proves 
the  identity  of  the  real  owner.  Letters  sent  from  the 
office  are  signed  Federal  Discount  per  A.  Greenberg.  A. 
Greenberg  is  the  young  woman  from  whom  the  borrower  osten- 
sibly receives  the  loan,  since  she  is  the  person  to  whom  the  ap- 
plication is  made  and  the  person  from  whom  the  borrower  re- 
ceives the  money.  The  name  of  L.  Doran  appears  in  a  con- 
spicuous place  upon  the  notification  of  assignment  which  is  sent 
to  the  employer  from  the  aforesaid  Federal  Discount  Company. 
L.  Doran  is  the  young  woman  who  collects  for  the  company, 
and  signs  her  name  as  treasurer  of  the  corporation. 

The  Articles  of  Incorporation  of  the  Federal  Discount  Com- 
pany under  date  of  August  26,  1905,  show  that  the  company  has 
an  authorized  capitalization  of  $25,000,  $24,800  of  which  is 
owned  by  Benjamin  J.  M.  Barreau,  $100  by  James  Frazer  and 
$100  by  Henry  J.  Graham.  Benjamin  J.  M.  Barreau  is  also 
known  in  business  circles  as  Benjamin  J.  M.  Galopin. 

The  offices  of  R.  C.  Chesterkirk  and  Walter  Graham,  both 
of  which  act  as  brokers  for  H.  C.  Courtwright  of  Providence, 
R.  L,  are  on  record  as  being  trade  names  for  the  State  Trading 
Corporation  which  is  organized  under  the  laws  (a)  of  the  State 

(a)   Chapter  908,  Laws  of  1896,  as  amended. 


BUSINESS  METHODS  NOW  EMPLOYED.  65 

of  New  York  with  a  capital  stock  of  $2,500.  Names  of  the 
signers  of  the  Articles  of  Incorporation  are,  A.  L.  Goldshear, 
Boston,  Mass.,  M.  F.  Valpey,  Providence,  R.  I.  and  R.  E. 
McGowan,  New  York  City. 

In  case  of  the  loan  office  of  Heron  &  Company  there  is  on 
file  in  the  County  Clerk's  office  under  date  of  January  14,  1907, 
a  document  in  which  Vina  Woodworth  of  Milwaukee,  Wiscon- 
sin, certifies  that  she  intends  to  conduct  and  transact  business  in 
the  City  of  New  York  under  the  name  of  Heron  &  Company. 

Recently  a  borrower  received  a  letter  (a)  concerning  the 
payment  of  a  loan  which  he  had  received  from  Heron  &  Com- 
pany, which  was  signed  by  W.  R.  Heron,  General  Broker.  It 
is  clearly  evident  from  the  correspondence  that  W.  R.  Heron 
and  Heron  &  Company  are  used  interchangeably. 

The  Piermont  Finance  Company,  according  to  the  statement 
made  to  the  County  Clerk,  is  the  trade  name  under  which  Mr. 
Raymond  H.  Boaz  and  Mr.  M.  May  are  conducting  the  bus- 
iness of  note  brokers,  which  being  interpreted  means  loaning 
money  secured  by  an  assignment  of  salary. 

The  owner  of  two  large  salary  loan  offices  in  the  city  has  re- 
fused upon  several  occasions  to  permit  his  name  to  be  known. 
The  manager  of  another  large  office  doing  business  under  a  com- 
pany name  carelessly  used  the  name  of  her  employer  in  conver- 
sation with  a  friend.  She  immediately  insisted  that  the  friend 
should  not  permit  the  name  of  the  owner  of  the  office  to  be- 
come public.  Another  manager  was  severely  criticized  by  her 
employer  for  using  his  name  in  conversation  with  a  borrower. 

The  case  of  D.  H.  Tolman  should  be  mentioned  as  an  ex- 
ception to  the  fact  that  the  real  owners  of  the  different  offices 
desire  to  be  unknown.  The  fact  is  emphasized  that  he  is  in 
the  salary  loan  business  and  that  he  owns  offices  in  sixty-three 
different  cities.  H^e  does  not  hesitate  to  criticize  his  compet- 
itors for  conducting  business  under  assumed  names.  A  letter 
recently  circulated  among  his  customers  will  illustrate  his  atti- 
tude: 


(a)   For  copy  of  letter,  see  page  60. 


66  SALARY  LOAN  BUSINESS  IN  NEW  YORK  CITY. 


OFFICE     OF 

I>.  H.  TOLMAN 

ROOM     816.     DOWNING     BUILDING 
108  FULTON   STREET 

Nsw    YORK    CITY 


IMPORTANT  NOTICE  TO  MY  PATRONS. 

This  is  to  oaution  my  customers  against  being  mislead  by  any  seeming 
'inducements  that  may  t>&  offered  by  any  of  my  late  employes  under  whatever 
fictitious  or  assumed  name  the  business  may  be  conducted.  Rival  concerns 
have  from  time  to  time  conspired  with  and  employed  some  Of  my  employes, 
trying  thereby  to  steal  my  business  and  I  deem  the  present  word  of  caution 
and  explanation  to  my  customers  due  them,  as  to  how  their  names  become 
known  and  business  solicited. 

There  are  certain  unscrupulous  men,  would  be  competitors,  who  have 
opened  several  offices  under  various  fictitious  or  assumed  names,  who  are 
afraid  to  do  business  under  their  own  names.  There  is  a  reason,  such 
firms  are  usually  irresponsible  and  frequently  have  to  pledge  what  they 
get  from  customers  for  capital  to  do  business  with;  such  business  thus 
becomes  public  and  in  case  of  insolvency  of  firm,  might  cause  customers 
irreparable  damage  and  jeopardize  their  positions.  There  are  many  other 
reasons  as  you  can  imagine  why  such  firms  are  afraid  to  do  business  in  the 
open.  Consider  whether  it  is  not  safer  and  better  to  deal  with  a  man  who 
has  *>een  established  in  all  the  leading  cities  of  •khe  country  for  many 
years,  than  with  an  unknown  concern. 

Remember,  I  have  no  interest  in  any  other  concern,  and  that  my  old 
customers  are  always  welcome  and  appreciated. 

Yours  truly, 

D.  H.  TOLliAN, 

Room  816,  108  Pulton  St.,  New  York  city 
Rodm  406,  31  West  42nd  St. ,  •  .  "   " 
Room  513,  Arbuokle  Building,  Brooklyn 
Room  312,  76  Montgomery  St. ,  Jersey  city. 

The  papers  signed  by  the  borrower  are  similar  in  the  cases  of 
the  different  companies.  The  Application  Blank,  Bill  of  Sale  of 
Salary,  and  Power  of  Attorney  are  the  three  legal  docu- 
ments (a)  which  are  always  signed  unless  the  power  of  attorney 

(a)   Copy  of  the  different  documents  given  in  the  Appendices. 


BUSINESS  METHODS  NOW  EMPLOYED.  67 

is  so  worded  that  the  signature  to  the  bill  of  sale  is  unneces- 
sary. In  a  few  cases  the  loan  company  requires  the  bor- 
rower to  sign  a  number  of  notes,  one  for  each  payment,  also 
several  blank  papers  which  are  to  be  filled  out  later.  These  blank 
papers  when  filled  out  constitute  an  assignment  of  wages  and 
are  served  upon  the  employer  in  case  the  employee  fails  to  meet 
his  payments.  In  one  office  the  writer  saw  four  of  these  blank 
papers  which  had  been  signed  by  an  applicant.  The  manager 
explained  that  they  would  be  used  only  in  case  the  borrower 
refused  to  pay. 

It  would  seem  that  a  man  with  ordinary  intelligence  would 
refuse  to  sign  a  blank  paper  giving  the  loan  company  the  power 
to  fill  it  out  later;  it  would  seem  also  that  he  would  refuse  to 
sign  the  power  of  attorney  which  in  the  majority  of  cases  is 
most  binding.  (a)  As  a  rule,  however,  there  is  no  objection  on 
his  part. 

There  are  several  reasons  for  his  willingness  to  sign  the  dif- 
ferent papers.  He  expects  to  meet  his  payments  promptly  and 
the  penalties  for  failure  to  pay  cited  in  the  documents  do  not 
alarm  him.  His  economic  condition  is  generally  such  that  the  se- 
curing of  the  money  is  an  absolute  necessity  and  the  thought  up- 
permost in  his  mind  is  the  procuring  of  the  loan.  A  number 
of  cases  have  been  investigated  by  the  writer  in  which  the  need 
of  immediate  relief  was  so  great  that  the  individual  involved 
was  willing  to  sign  almost  anything  in  order  to  overcome  the 
emergency.  The  nature  of  the  documents  themselves  and  the 
inability  of  the  ordinary  individual  to  understand  legal  terms 
make  the  securing  of  the  signature  less  difficult.  The  manner 
in  which  the  papers  are  often  arranged  for  signature  makes 
the  reading  of  them  impossible.  They  are  either  so  folded  (b) 
that  their  character  is  concealed  or  arranged  under  other  papers 
so  that  the  entire  document  is  covered  except  the  space  for  the 
signature.  Numerous  cases  have  been  found  in  which  the  bor- 
rower denied  having  seen  the  papers  which  he  had  evidently 

(a)  An  attorney  expressed  the  belief  that  the  Power  of  Attorney  used  by 
H.  A.  Courtright  is  the  most  binding  document  he  had  ever  read.     For  copy  of 
same,  see  Appendix  III,  page  97. 

(b)  For  copy  of  the  folded  paper,  see  page  facing  page  54. 


68  SALARY  LOAN   BUSINESS  IN   NEW  YORK   CITY. 

signed.  (a)  Should  any  question  arise  in  the  mind  of  an  appli- 
cant as  to  the  contents  of  the  papers  to  be  signed  it  is  immedi- 
ately dispelled  by  the  firm  assurance  of  the  manager  that  the 
paper  is  of  no  practical  value,  that  it  is  only  a  necessary  form 
which  must  be  carried  out  in  order  to  make  the  transaction  le- 
gal. The  manager  of  several  large  offices  said  to  one  of  her 
friends  that  the  individuals  in  charge  of  the  different  offices  were 
instructed  to  arrange  the  papers  so  that  the  applicant  could  not 
read  them.  The  reason  given  was  the  fear  that  if  the  contents 
of  the  papers  were  known  to  the  borrower  he  would  refuse  to 
sign  them.  Several  employees  have  denied  signing  the  papers 
when  they  were  presented  to  them,  but  they  were  forced  to 
admit  that  the  signature  was  genuine. 

The  attitude  upon  the  part  of  the  loan  companies  toward 
a  third  party  who  attempts  to  settle  for  a  borrower  should  be 
considered.  It  depends  very  much  upon  the  relationship  of  the 
thirdj  party.  If  he  is  a  friend  of  the  borrower,  the  company 
demands  the  entire  amount  and  will  not  consider  any  other  prop- 
osition. If  he  is  an  attorney,  the  company  generally  shows  a 
marked  disposition  to  arbitrate  and  settle  the  matter  at  once. 
In  the  majority  of  the  cases  in  which  an  attorney  has  attempted 
to  settle,  and  could  secure  the  cooperation  of  the  employer,  the 
loan  company  has  settled  for  the  amount  of  cash  received  plus 
a  reasonable  rate  of  interest.  If  the  third  party  is  the  employer 
of  the  borrower  and  he  refuses  to  pay  the  amount  demanded, 
it  is  very  seldom  that  the  loan  company  takes  any  legal  action 
as  they  believe  this  kind  of  publicity  detrimental  to  their  bus- 
iness. The  only  important  case  in  recent  years  in  which  a  loan 
company  seriously  contested  the  law  was  the  case  of  Thompson 
versus  Interborough  Rapid  Transit  Company.  (b) 

The  connection  between  the  different  loan  companies  is  a 
subject  which  has  attracted  considerable  attention.  It  is  a 
not  uncommon  belief  that  the  various  loan  offices  in  the  city 
have  a  clearing  house  where  the  names  of  the  customers  of  all 
the  offices  are  on  record.  This  however  is  not  the  case.  The 
keenest  competition  exists  and  it  is  impossible  for  one  company 

(a)  For  affidavit  of  George  Kay,  see  page  53. 

(b)  49  N.  Y.  Miscellaneous  102. 


BUSINESS  METHODS  NOW  EMPLOYED  6*9 

to  secure  the  names  of  the  customers  of  another.  The  absence  of 
a  central  clearing  house  is  proved  by  the  fact  that  cases  are  not 
uncommon  in  which  the  same  individual  has  loans  from  several 
different  companies  at  the  same  time.  Several  attempts  have 
been  made  to  secure  some  method  of  cooperation  but  they  have 
all  failed.  The  reason  given  by  the  managers  of  the  loan  offices 
is  the  fear  that  some  of  the  companies  would  use  the  central 
office  as  a  means  of  securing  customers.  One  manager  said, 
"If  we  have  a  good  customer,  we  don't  want  to  lose  him ;  if  we 
have  a  poor  one  we  would  like  to  have  him  do  the  other  com- 
pany the  same  as  he  has  done  us." 

The  companies  all  agree  that  some  plan  which  would  make 
it  impossible  for  the  same  individual  to  borrow  from  several  dif- 
ferent companies  at  the  same  time  would  be  extremely  desirable. 
Aside  from  the  offices  which  are  owned  by  the  same  person  there 
is  a  certain  amount  of  cooperation  among  a  few  of  the  other 
companies.  It  takes  the  form  of  friendly  relationship  between 
the  managers  and  they  converse  with  one  another  freely  concern- 
ing the  individuals  who  have  loans  with  them.  A  common 
method  of  attempting  to  secure  information  is  to  inquire  by  tele- 
phone of  the  different  offices  whether  or  not  a  certain  individual 
has  a  loan  with  them  and  also  whether  he  is  considered  a  good 
risk.  This  method  is  often  unreliable  as  is  shown  by  the  follow- 
ing experience : 

A  certain  employee  had  considerable  trouble  with  several 
companies  but  finally  secured  the  necessary  money  and  paid 
them  all  in  full.  He  applied  at  another  office  for  a  loan  and  the 
manager  telephoned  to  one  of  the  companies  with  which  he  had 
a  previous  loan  and  asked  the  manager  about  him.  She  replied 
that  he  was  "all  right,  only  a  little  slow."  The  office  which  gave 
the  favorable  report  considered  the  man  in  question  to  be  posi- 
tively dishonest  and  had  refused  him  another  loan. 


VIII. 
LOAN  COMPANIES  AND  THE  LAW. 

Several  states  have  attempted  either  to  regulate  or  to  prohibit 
entirely  the  loaning  of  money  secured  by  an  assignment  of 
wages.  The  table  inserted  herewith  presents  in  tabular  form  the 
most  important  provisions  of  the  laws  of  the  different  states,  to 
Jan.  i,  1908. 

Seventeen  states  have  some  legislation  upon  the  subject. 
The  scope  of  the  legislation  varies.  Louisiana  and  New  York 
are  types  of  states  which  have  very  little,  while  Massachusetts 
and  Maryland  give  illustrations  of  rather  extensive  laws.  Vir- 
ginia, Georgia,  Colorado,  Michigan  and  Tennessee  have  in 
eluded  the  regulation  of  loans  secured  by  an  assignment  of 
wages  and  loans  secured  by  mortgage  on  household  furniture  in 
the  same  law. 

Indiana  and  Georgia  definitely  prohibit  the  assignment  of 
unearned  wages  under  any  condition.  Georgia,  however,  per- 
mits the  assignment  of  wages  which  have  been  earned  at  the  time 
of  the  assignment.  Ten  states  have  determined  by  law  the 
wages  that  may  be  assigned,  five  of  which  make  legal  the  as- 
signment of  future  wages,  one  the  assignment  of  wages  earned 
at  the  time  of  the  assignment,  and  four  wages  either  earned  or 
to  be  earned  at  the  time  of  the  assignment.  Seven  of  the  states 
require  that  the  assignment  be  recorded  and  four  require  that 
the  assignment  be  acknowledged  before  an  officer  of  the  law 
authorized  to  take  acknowledgements.  Five  states  definitely 
limit  the  time  for  which  the  assignment  may  be  made.  The 
time  varies  from  thirty  days  in  Colorado  to  two  years  in  Massa- 


SUMMARY  OF  THE  LAWS  OF  THE  DIFFERENT  STATES 


State. 

Wages  that 
may  be 
assigned. 

Acknowledg- 
ment  re- 
quired. 

Entry  in 
Public  Rec- 
ords. 

Limit  of  time 
for  which  fu- 
ture  wages 
may  be  as- 
signed. 

Notificatio] 
of  employ  el 

Colorado. 

Wages  or  sal- 
ary earned  or 
to  be  earned. 

Recorded 
with  County 
Recorder 
within  fire 
days  from 
date  of 
assignment. 

30  days  from 
date  of  as- 
signment. 

Notice  of  1 
assignmer  i 
in  writing! 
given  to 
employer 
within  10 
days  afte: 
execution. 

Connecticut. 

Applies  to 
future  earn- 
ings. 

Must  bear 
certificate  of 
acknowledg- 
ment of  as- 
signor. 

Must  be  re- 
corded with 
Town  Clerk. 

Time  definite- 
ly stated  in 
contract. 

Copy  of  i  \ 
signment 
must  be 
given  the 
employer. 

Georgia. 

Applies  to 
wages  due 
at  the  time 
of   the    as- 
signment. 

1 

Illinois. 

Wages  to  be 
earned  in 
whole  or 
in  part. 

Acknowledged 
in  person  by 
assignor  be- 
fore Justice 
of  Peace. 

Must  be  en- 
tered upon 
the  docket 
of  the  Jus- 
tice of 
Peace. 

Six  months 
from  time 
of  assign- 
ment. 

Copy  of  a? 
signment 
served  upo 
employer 
within   3 
days  from 
date  of  ac- 
knowledg- 
ment. 

Indiana. 

Iowa. 

Must  be  ac- 
knowledged 
before  an 
officer  of  the 
law. 

Notice  in 
writing  of 
assignmenl 
given  to 
employer. 

Louisiana. 

Future 
wages. 

Maine. 

Recorded 
with  Clerk 
of  County. 

Actual    nol 
thereof  to 
employer. 

Maryland. 

Acknowledg- 
ment before 
Justice  of 
the  Peace, 

Must  be 
recorded. 

Six  months 
from  date 
of   assign- 
ment. 

Notice   of 
signment 
execution 
served  upo 

uTf&Tt'r 

days. 

5JONCERNING  THE  ASSIGNMENT  OF  WAGES  JANUARY  J,  J908. 


^=7 

tionj 

1 

Concurrence 
of  husband 
and  wife. 

Charges 
allowed. 

Contents  of 
assignment. 

Consent  of 
employer. 

License. 

Other  pro- 
visions. 

Gent 

* 

er 
10 
fter 
ion. 

Signature  of 
both   husband 
and  wife 
necessary. 

2  per  cent 
per  month 
upon  actual 
amount  re- 
ceived. 

Must  state 
the  amount 
of  salary 
assigned. 

i 

License  must 
be  secured 
from  Board 
of  County 
Commission- 
ers or  City 
Council. 

One-half  the 
fines  to  in- 
former and 
one-half  to 
school  fund. 

ofJ! 

ent    ' 
be 
the  , 
J«.  I 

Rate  of  in- 
terest, time  of 
assignment 
and  amount  of 
indebtedness. 

- 

License  re- 
quired. 

Any  assign- 
ment of  fu- 
ture wages 
void.     Lender 
bonded. 

iv  of  as 
amen 
vedu 
ployer 
bin  3 
fs  from 
-of 
ric 
rat. 

Must  be  ex- 
ecuted and 
Acknowledged 
by   both 
husband 
and  wife. 

Assignment 
of  future 
wages  void. 

Mitt  in 

mting  of 

Husband    and 
wife  must 
both  acknowl- 
edge   the    as- 
signment. 

Assignment 
shall  have 
priority  in 
order  of 
execution 
upon   em- 
ployer. 

Employer 
must  con- 
sent   in 
writing. 

, 

j. 

ixt'cuted   and 

Six  per  cent 
per  annum. 

Evidence  of 
notice  to  em- 
ployer to  be 
his    signature 

«i 

AIM 

upon    original 
assignment. 

'GOl 


•9QT  J^duilO  '9061  JO  SAVBI—  BIUIS.IIA 
'S06l  'IS  aajdeqo  '8061  'aassaauaj,  jo  SAYBI  —  aassauaai, 
qo  '9681  'PUBJSI  apoqn  jo  SAVBI  jBaaaao  —  puBisi  apoqa 


'808 


'2,88 


jo 

'Q06T 
N[   '106T 


jo 

jo 
jo  SAVBq  — 


arn  oxr 


f 

•paamb 
-aa  asuaoii 

aq;  jo 

01  uado  si 
qoiqM  jjooq 
ui  papa  oo 

-oa  iSSS 

inasuoo  ;snra 

- 

qoua  ^uiu.iao 
-uoo  S;DBL<I 

•SUJ^UAV    UI 

aq;  ;dao 
-DB  ;snra 
saaA'oidrag 

•paujBa  aq 

-;iJAi  ui  ;uas 
-uoo  ;snui 

•QUO*  IS  -101 
puoq  9Ai8 

puu  pred  A*ifitio 

SuraiBJUOO  !}U9UI 
-9;B^S  UO^IJAV 
H  89AI909.I  J9A4.OJC 
-JOq  9pBUI  9JB 

•^;p  aq;  jo 
ino.ij  asuaoiq 

-ui      -UBOI   jo 
aratj,    -UBO] 
jo  ;unorav 

•q;uoui  aad 
;uao  jad  OAVX 

junouiB''9np 

JO  )U9UI9!J'B^S 
B  UIB^UOO 

jsniu  J9j£oid 

•paamb 

-8.T   UIJOJ  PJB 

aq  o;  ;saJa; 
-ui     'paAiao 
-aa   A'auoui 
jo  ;UUOUIY 

SM.VT 


'66S  aajduqo   '9061   JO 

'SOT    -T9ldBqo    '106T    'auiBK    jo    SAVBT; — 9UIBK 
•c  -OM  '906T  'BUBismo-i  jo  s:pv — BUBtsmoq 
•gfrl  .T9}dBqo  '9061  'UAVOI  jo  SAVBT; — imoi 
'S06T  pestAaa  'uimpui  jo  se^n;^g — ^nuipui 
"08-61   92t?d    'Q06T    'sjounil   jo   SAITTJ — siounil 
'I  ^^<I  '1T9  'ON     '^06T  '^iSaoao  jo  gAi^q — 
j  '1.-06T   '^nDi^oanuoo  jo  s:p 

'l*Z  'OfZ  Je^d^qo     '106T 


MOIXVXIO 


•9PBUI    SI 


jo  aapaoo 
-9H   q^iM 

P9PJOD9H 


•51J9IO 

q^iM 

P9PJ009H 


-SB  JO  9}Bp 

raoaj  s^Bp  09 


-X9  JO 


uodn 


U9AIS 
UB 


PUB 
-SB  jo 


-U2{SSB    JO 

raoaj 

OAVJ, 


P9UJB9UQ 


•99SS9UU91, 


epoqn 


'P9UJB9 

9q  o^  PUB 

P9UJB9 


•P9UJB9  9q  o; 
jo 


'S92BM 


LOAN  COMPANIES  AND  THE  LAW.  71 

chusetts.  Connecticut  does  not  place  a  definite  limit  upon  the 
assignment  but  requires  that  the  time  of  the  assignment  be 
definitely  stated  in  the  contract. 

Ten  of  the  states  require  that  the  employer  be  notified  of 
the  assignment,  either  when  it  is  made  or  within  a  reasonably 
short  time.  (a)  New  Hampshire,  Louisiana,  Rhode  Island  and 
Tennessee  go  further  in  this  respect  than  any  of  the  other  states 
and  demand  that  the  employer  accept  the  assignment  in  writing 
before  the  same  is  valid.  A  very  helpful  provision  which  aims 
to  obviate  trouble  in  the  home,  is  included  in  the  laws  of  four  of 
the  states,  viz:  the  signature  or  acknowledgment  of  the  assign- 
ment by  both  the  husband  and  the  wife. 

Only  three  of  the  states  definitely  regulate  the  charges  which 
may  be  collected  on  a  salary  loan.  Several  of  them  legalize 
charges  for  investigating  security  offered,  but  since  this  applies 
only  to  those  laws  which  include  mortgage  loans  and  the  charges 
are  intended  primarily  for  investigation  of  the  property  upon 
which  the  mortgage  is  given,  they  are  not  included  in  this  table. 

Four  of  the  states  require  that  the  assignment  contain  certain 
definite  information.  Colorado  provides  that  the  amount  of  sal- 
ary assigned  must  be  stated.  Connecticut  requires  the  rate  of 
interest  and  the  time  of  assignment  to  be  given.  Massachusetts 
not  only  requires  that  the  assignment  state  the  amount  of  money 
received  and  the  interest  to  be  paid  but  also  that  a  standard 
form  (b)  of  assignment  be  used.  The  Michigan  law  requires 
that  the  assignment  contain  the  amount  of  the  loan,  interest 
charged  and  time  of  loan. 

Five  states  require  a  license  in  order  to  conduct  the  business 
of  loaning  on  salaries.  Maryland  and  Massachusetts  define  what 
the  term  assignment  shall  include.  The  Iowa  law  provides 
that  assignments  shall  have  priority  in  order  of  execution  upon 
employer.  Connecticut  has  the  unique  system  of  paying  to  the 
informer  one-half  the  fines  collected.  The  Michigan  law  pro- 
vides that  when  a  payment  is  made  the  borrower  shall  receive 
a  slip  containing  the  amount  paid,  amount  previously  paid  and 
the  amount  due. 

(a)  For  the  manner  of  evading  this  provision  of  the  law  in  New  York,  see 
page  75. 

(b)  See  Appendix  XVIII,  page  121. 


72  SALARY  LOAN   BUSINESS   IN   NEW  YORK  CITY. 

In  addition  to  the  state  law,  a  few  of  the  large  cities  have 
police  regulations  which  supplement  this  law.  Boston  is  a 
good  illustration  of  this  type  of  regulation.  The  state  law  (a) 
is  supplemented  by  police  regulations  (b)  the  chief  provisions 
of  which  are  as  follows:  To  loan  money  in  amounts  of  less 
than  $200  for  an  interest  greater  than  12  per  cent  per  annum 
secured  by  an  assignment  of  wages,  a  license  must  be  secured 
from  the  Board  of  Police ;  the  license  is  good  for  one  year  or 
until  September  following  the  date  when  secured;  a  bond  of 
$500  is  required,  also  the  payment  of  a  $50  license  tax  anually ; 
interest  of  24  per  cent  per  annum  may  be  charged  if  the 
amount  does  not  exceed  $50;  if  the  loan  is  for  more  than  $50, 
an  interest  rate  of  18  per  cent  is  allowed.  When  the  loan  is 
made,  the  lender  must  give  the  borrower  free  of  charge  a 
ticket  which  shall  have  the  form  approved  by  the  Board  of 
Police,  stating  in  plain  English  language  the  nature  of  the 
loan,  names  of  persons  involved,  property,  mortgage  or  wages 
assigned,  date  debt  is  to  become  due,  and  rate  of  interest  to 
be  charged.  Each  payment  must  be  endorsed  upon  the  back 
of  the  ticket  and  a  statement  made  whether  it  is  interest  or 
payment  on  principal;  it  must  also  state  amount  paid  and 
amount  still  due.  In  case  the  ticket  is  lost,  the  lender  must 
give  the  borrower  a  copy  of  it  free  of  charge. 

Every  licensee  must  keep  a  book  with  the  actual  transac- 
tion of  each  person  recorded.  He  must  also  send  a  written  re- 
port to  the  chief  inspector  of  police  on  the  first  day  of  each 
month  stating  briefly  all  loans  made,  names  of  persons  and 
amount  and  security  taken,  and  all  loans  paid  off,  all  mort- 
gages and  assignments  released  and  all  foreclosed  for  the 
month.  Such  information  shall  not  be  divulged  by  the  chief 
inspector  except  when  required  by  law  or  by  order  of  the 
Board  of  Police.  All  books  of  the  licensee  are  open  to  inspec- 
tion of  the  Board  of  Police  or  any  police  officer  authorized  by 
them.  Violation  of  the  preceding  ordinance  may  be  punished  by 
a  fine  not  to  exceed  $300,  or  imprisonment  in  the  workhouse 

(a)  For  copy  of  law,  see  Appendix  XVIII,  page  120. 

(b)  Police  Rule,  Chapter  102,  Section  57-61. 


LOAN   COMPANIES  AND  THE  LAW.  73 

for  a  period  not  exceeding  60  days,  or  both.     The  Board  of 
Police  may  revoke  the  license. 

There  has  been  very  little  legal  regulation  of  the  salary  loan 
business  in  New  York  City.  There  are  no  local  police  regulations 
and  the  only  state  law  with  reference  to  the  business  except  the 
general  usury  law  (a)  is  the  law  of  1904,  (b)  previously  men- 
tioned on  page  ,  which  provides  that  the  loan  company 
taking  an  assignment  of  the  wages  of  an  employee  must  file  a 
duly  authenticated  copy  of  the  same  with  the  employer  within 
three  days  from  the  date  when  the  assignment  was  made. 

Prior  to  1904,  section  378  of  the  penal  code  made  it  a  mis- 
demeanor to  charge  more  than  6  per  cent  upon  a  loan  secured 
by  an  assignment  of  wages.  Under  this  law  the  District  At- 
torney made  a  very  vigorous  prosecution  of  the  salary  money 
lenders  during  the  winter  of  1903-4.  The  result  was  the  clos- 
ing of  practically  all  of  the  loan  offices  in  New  York  City. 
The  majority  of  the  owners  of  the  different  offices  immediately 
fled  to  New  Jersey  where  they  continued  in  the  same  business 
until  an  amendment  was  secured  to  the  penal  code  in  1904, 
which  excluded  loans  secured  by  an  assignment  of  salary 
from  criminal  prosecution.  Practically  all  of  those  who  had 
gone  to  New  Jersey  following  the  activity  of  the  District  At- 
torney's office,  now  returned  to  New  York  and  re-opened  their 
offices. 

The  courts  have  consistently  held  that  wages  are  a  com- 
modity and  as  such  are  assignable,  also  that  they  are  capable 
of  purchase  and  sale.  (c)  The  court  held  in  the  case  of 
Bliss  vs.  Lawrence  (d)  that  although  wages  might  be  bought 
and  sold,  like  any  other  commodity,  yet  the  sale  or  assign- 
ment of  the  wages  of  a  public  officer  could  not  be  considered 
valid,  since  such  sale  or  asignment  is  against  public  policy. 

The  decision  immediately  raises  the  query,  whether  con- 
ditions at  the  present  time  do  not  demand  an  attitude  on  the 
part  of  the  court  which  would  extend  the  interpretation  now 

(a)  Any  rate  higher  than  six  per  cent  per  annum  is  usury. 

(b)  Laws  of  New  York,  1904,  Section  77.      For  copy  of  Law,  see  Appendix 
XVII,  page  120. 

(c)  American  Encyclopedia  of  Law,  Vol.  1,  page  828. 

(d)  58  New  York  442. 


74  SALARY  LOAN  BUSINESS  IN  NEW  YORK  CITY. 

placed  upon  the  assignment  of  the  salaries  of  public  officers 
to  all  wage  earners  whose  wages  are  only  sufficient  to  sup- 
port their  families.  This  idea  has  been  realized  in  some  of  the 
states  by  exempting  a  part  or  the  whole  of  an  employee's 
salary.  (a)  There  are  so  many  considerations  to  be  be  taken  into 
account  in  determining  which  plan  is  the  better  for  the  labor- 
ing man  and  for  society  as  a  whole,  that  perhaps  it  is  impos- 
sible to  decide  at  the  present  time  which  is  the  better  policy, 
but  the  subject  is  of  sufficient  importance,  at  least,  to  merit 
careful  consideration. 

The  general  usury  law  is  evaded  with  impunity  in  New 
York  City  at  the  present  time.  The  defense  of  the  money 
lenders  is  that  they  are  not  loaning  money  secured  by  an  as- 
signment of  wages,  but  that  they  are  purchasing  salaries. 
Their  attitude  is  illustrated  by  the  following  extract  from  an 
item  in  the  Montreal  Star  of  March  3,  1908: 

Word  was  recently  sent  out  by  Mr.  A. 
Bienvenu,  of  the  city  licensing  department 
that  the  money-lenders  would  have  to  pay 
the  sum  of  $200  a  year  under  by-law  362 
which  so  provides. 

When  the  notification  was  sent  to  his  [D. 
H.  Tolman's]  office  here  it  was  forwarded  to 
him  in  Brooklyn,  for,  of  course,  it  could  not 
be  handed  to  him  in  Montreal.  In  due 
course  the  following  answer  was  received  by 
Mr.  Bienvenu : 

Auditing  Department, 
D.  H.  TOLMAN 

Boom  515 
367  Fulton  Street, 
Brooklyn,  N.  Y.,  Feb.  26th,  1908. 
Mr.  A.  Bienvenu,  Supt.  of  Licenses,  Mont- 
Dear  Sir. — Replying  to  yours  of  24th, 
would  say  you  seem  to  be  under  the  Im- 
pression that  my  office  in  your  city  now 
does  a  money-lending  business,  WHICH  IT 
DOES  NOT  DO.  We  have  done  no  loaning 
business  in  Canada  for  about  two  years. 
We  simply  buy  time.  That  is  if  a  man 
wants  to  sell  a  week's  or  a  month's  future 
wages  we  buy  the  same,  just  as  we  would 
so  much  growing  crop  of  wheat  or  apples 
on  the  trees,  or  any  other  commodity,  for 
future  use.  WE  TAKE  NO  NOTES  WHAT- 
EVER, THEREFORE  NO  INTEREST.  Con- 
sequently we  are  not  liable  for  any  money- 
lending  license  whatever.  I  am,  however, 
perfectly  willing  to  pay  my  business  tax, 
same  as  any  one  else  does,  any  time,  in 

(a)   Code  of  Georgia,  Section  4732. 
Kentucky  Statutes,  Section  1701,  1701a. 
Statutes  of  Oklahoma,  Section  5084. 
Wisconsin  Statutes,  2084. 


LOAN   COMPANIES  AND  THE  LAW.  75 

proportion  to  my  rent,  and,  I  don't  think 
that  you  should  try  to  enforce  any  license 
that  I  am  not  liable  for,  or  in  any  way 
to  annoy  my  employees  or  to  cable  at  my 
expense,  as  I  wish  to  do  the  proper  thing 
and  obey  the  laws  at  all  times. 
Yours  very  truly, 

D.   H.   TOLMAN. 

Mr.  Tolman  is  invited  to  come  to  Mont- 
real and  discuss  the  question  with  the  city 
attorney. 

The  law  of  1904  (a)  provided  for  the  notification  of  the 
employer  within  three  days  after  an  assignment  of  the  wages 
of  an  employee  had  been  made.  The  loan  companies  have  at- 
tempted to  evade  this  law  by  requiring  the  borrower  to  sign 
a  power  of  attorney.  This  document  which  the  borrower 
is  required  to  sign  authorizes  an  attorney  to  sign  the  borrow- 
er's name  to  several  different  legal  documents,  one  of  which 
is  a  bill  of  sale  of  his  salary.  The  contention  of  the  loan  com- 
pany is  that  the  employee  does  not  assign  his  salary  when  he 
signs  the  power  of  attorney,  but  that  the  salary  is  assigned 
when  the  attorney  signs  the  employee's  name  to  the  bill  of 
sale.  If  the  contention  of  the  loan  company  is  valid,  the  law 
of  1904  is  of  no  effect,  since  the  attorney  makes  the  assign- 
ment three  days  before  the  time  it  is  served  upon  the  em- 
ployer. 

The  method  used  by  one  of  the  loan  companies  to  evade 
any  attempt  at  legal  regulation  by  the  state  of  New  York,  is 
that  of  having  its  office  in  Providence,  Rhode  Island,  and  of  acting 
through  brokers  who  have  offices  in  New  York  City.  The 
brokers  disavow  any  responsibility  for  the  loan  and  the  trans- 
action is  ostensibly  carried  out  in  the  state  of  Rhode  Island. 
The  borrower  receives  a  check  dated  at  Providence,  signed 
by  H.  A.  Courtright  for  the  amount  of  the  loan,  and  is  re- 
quired to  make  his  payments  direct  to  the  office  at  Providence. 
The  transaction  is  made  to  appear  so  complicated  that  the 
borrower  finds  it  difficult  to  understand  the  relationship  of  the 
different  persons  involved.  The  borrower  is  required  to  sign 
a  power  of  attorney  which  authorizes  said  attorney  to  sign 
the  name  of  the  borrower  to  promissory  notes.  It  is  made  to 

(a)  Laws  of  1904,  Section  77. 


76  SALARY  LOAN  BUSINESS  IN   NEW  YORK  CITY. 

appear  that  the  attorney  resides  in  Providence,  where  a  suf- 
ficient number  of  notes  are  made  out  to  cover  the  amount  to 
be  paid  by  the  borrower.  A  separate  note  is  made  out  for 
each  payment.  The  notes  do  not,  upon  their  face,  bear  in- 
terest until  maturity,  since  the  interest  or  charge  for  the  loan 
is  included  in  the  face  of  notes.  After  maturity  the  notes 
bear  interest  at  2  per  cent  per  month.  The  interest  charged, 
although  legal  according  to  the  law  of  Rhode  Island,  where 
the  loan  is  assumed  to  be  made,  would  be  illegal  according 
to  the  laws  of  New  York,  where  the  transaction  actually  takes 
place. 

The  borrower  is  notified  when  he  received  the  check  from 
Providence,  signed  by  H.  A.  Courtright,  that  the  notes  have 
been  sold  to  him.  It  is  extremely  difficult  under  such  circum- 
stances to  establish  by  legal  evidence  the  relationship  between 
the  amount  of  cash  actually  received  by  the  borrower  and  the 
face  value  of  the  notes,  which  Mr.  Courtright  claims  to  have 
purchased.  Under  the  power  of  attorney  the  loan  company 
may  file  with  the  employer  at  any  time,  an  assignment  of  the 
wages  of  the  employee.  If  the  employer  refuses  to  recognize 
the  assignment  and  action  is  begun  by  the  loan  company  to 
recover  the  salary  of  the  employee,  the  court  has  held,  as  in 
the  case  of  Thompson  versus  Interborough  Rapid  Transit 
Company  (a)  that  the  defense  of  usury  cannot  be  set  up,  be- 
cause that  defense  is  personal  to  the  borrower.  The  only 
remedy  at  law  which  the  employee  has  found  so  far,  is  a  suit 
for  the  recovery  of  the  amount  paid  the  loan  company  in  ex- 
cess of  the  legal  rate.  This  is  practically  out  of  the  question  for 
the  borrower,  inasmuch  as  he  does  not  have  the  time  and  money 
at  his  disposal. 

Several  cases  have  been  investigated  recently  in  which  it 
was  impossible  to  secure  legal  protection  for  the  borrower, 
although  there  existed  a  just  and  adequate  remedy  at  law. 
The  employer  had  made  a  ruling  that  if  any  employee  was 
known  to  borrow  money  from  salary  money  lenders  he  would 
be  discharged.  The  loan  company,  aware  of  this  regulation 

(a)  49  N.  Y.  Miscellaneous  102. 


LOAN   COMPANIES  AND  THE  LAW.  77 

by  the  employer,  threatened  to  notify  him  in  case  the  em- 
ployee, for  any  reason,  refused  to  pay  the  amount  demanded. 
The  threat  of  notifying  the  employer,  which  would  result  in  the 
loss  of  his  position  to  the  employee,  has  made  it  possible  for 
some  of  the  money  lenders  to  collect  exorbitant  charges  for 
their  services.  If  the  money  lender  suspects  that  the  borrower 
has  consulted  an  attorney  as  to  the  legality  of  the  charges 
imposed,  he  is  immediately  advised  that  his  employer  will 
be  notified  of  the  assignment.  This  "club"  of  the  money 
lenders  has  done  effective  service  not  only  in  New  York  City, 
but  in  other  cities  of  the  United  States  where  the  law  is  much 
more  stringent. 

In  several  cases  which  have  been  tried  in  recent  years  the 
court  has  held  that  the  schemes  of  the  loan  companies  are  only 
different  methods  employed  to  hide  a  usurious  loan  and  has 
found  in  favor  of  the  borrower.  One  of  the  most  notable  of 
these  cases  is  that  of  D.  H.  Tolman  versus  Union  Casualty 
&  Surety  Company.  (a)  The  case  was  appealed  from  the  St. 
Louis  Circuit  Court.  Tolman  sued  to  collect  $150.00  on  a 
loan  of  $83.00  and  submitted  as  evidence  of  the  debt  the  power 
of  attorney  (b)  which  the  borrower  had  signed.  The  court 
held  as  follows:  "We  have  no  doubt  but  that  the  agreement 
between  Tolman  and  Andrews  was  for  the  purpose  of  secur- 
ing a  usurious  loan." 

The  municipal  court  of  Rochester,  New  York,  has  within 
a  few  months  rendered  a  similar  decision  against  Mr.  Tolman. 
The  following  extract  from  a  letter  written  by  the  attorney  (c) 
for  the  borrower  gives  the  chief  points  involved  in  the  case: 
"The  defense  was  that  Tolman  had  bought  this  man's  salary, 
or,  in  other  words,  had  bought  his  time.  To  prove  this,  the 
assignment  of  wages  was  given  in  evidence.  My  contention 
was,  that  no  matter  what  form  the  transaction  might  take,  the 
law  would  look  through  the  form  to  the  substance  and  effect. 
I  held  this  was  in  effect  a  loan,  no  matter  what  it  was  called. 
The  judge  left  it  to  the  jury  .  .  .  and  the  verdict  was  in 
our  favor."  . 

(a)  90  Missouri  App.,  274. 

(b)  See  Appendix  V,  page  102. 

(c)  Mr.  Geo.  S.  Van  S'chaick  of  Rochester,  N.  T. 


78  SALARY  LOAN  BUSINESS  IN  NEW  YORK  CITY. 

The  case  has  been  appealed  by  Tolman  to  the  county  court 
and  the  outcome  is  awaited  with  considerable  interest,  as  is 
also  the  outcome  of  the  action  which  has  been  brought  through 
Mr.  Bernard  Robinson,  attorney,  against  three  different  salary 
loan  companies  (a)  in  New  York  City  to  recover  the  differ- 
ence between  the  amount  of  cash  received  by  the  borrower, 
plus  a  reasonable  rate  of  interest  and  the  amount  the  borrower 
was  compelled  to  pay.  There  is  a  tendency  on  the  part  of  the 
court  to  look  through  the  form  of  a  transaction  to  the  sub- 
stance and  to  hold  that  any  advance  of  money  is  a  loan  and 
as  such  is  subject  to  the  general  usury  law. 


(a)   Wassam  vs.  H.  A.  Courtright. 
Leake  vs.  Patterson  Co. 
Gully  vs.  New  Jersey  Finance  Co. 


IX. 
EFFECTS  OF  THE  LOAN  COMPANIES. 

Modern  economic  life  is  so  complicated  that  it  is  almost 
impossible  to  determine  the  effect  of  a  single  cause  in  producing 
a  general  result.  Social  workers  agree,  for  instance,  that  there 
is  no  one  cause  of  poverty,  intemperance,  destitution  or  crime, 
but  that  there  are  at  work  a  number  of  causes,  which  are  so 
closely  intermingled  that  it  is  impossible  to  calculate  the  exact 
influence  which  each  has  exerted  in  producing  the  general  effect. 
There  can  be  no  question  that  the  salary  loan  business  in  New 
York  City  if  not  the  direct  cause  of  certain  economic  and  social 
ills  has  at  least  been  an  important  contributory  cause. 

The  effect  upon  the  employer  is  found  to  be  practically 
the  same  in  every  instance  in  which  the  employee  is  unable 
to  meet  his  payments.  There  is  decreased  efficiency  due  to 
worry  concerning  the  loan ;  interference  with  the  operation  of 
the  business  by  visits  from  collectors,  telephone  calls  and 
letters  (a)  ;  increased  expense  in  bookkeeping  when  the  em- 
ployee's salary  is  held  up ;  a  general  loss  of  confidence  in  the 
employee.  These  results  are  so  important  that  a  large  num- 
ber of  establishments  in  the  city  discharge  an  employee  when 
an  assignment  of  wages  is  filed  upon  him  by  the  loan  com- 
pany. In  the  entire  investigation  not  a  single  employer 
was  found  who  was  not  definitely  opposed  to  having  his  em- 
ployees borrow  from  a  salary  loan  company. 

It  should  not  be  understood  that  all  of  the  employees  who 
borrow  from  the  loan  companies  cause  their  employers  the 

(a)  The  cashier  of  a  large  bank  has  received  over  forty  letters  from  one 
company  concerning  a  loan  of  an  employee. 


8O  SALARY  LOAN  BUSINESS  IN   NEW  YORK  CITY. 

inconveniences  here  indicated.  Many  secure  loans  and  repay  them 
unknown  to  their  employers.  What  has  been  said  applies  only 
to  an  employee  who  for  any  reason  is  unable  to  meet  his  payments. 
The  influence  of  the  loan  company  upon  the  home  is  more 
difficult  to  determine.  The  value  of  any  service  is  measured 
by  the  utility  to  the  individual  who  receives  it.  It  is  quite 
possible  that  a  loan  upon  which  a  very  high  rate  of  interest 
is  paid  may  be  of  such  great  value  to  the  individual  at  the  time 
he  receives  it  that  he  can  well  afford  to  pay  the  interest  de- 
manded. If  the  loan  enables  the  family  to  meet  a  temporary 
emergency  and  can  be  repaid  without  serious  inconvenience,  it 
serves  a  good  purpose,  but  if  the  rate  of  interest  is  so  high 
that  it  is  impossible  for  the  family  to  pay  it  without  seriously 
lowering  its  standard  of  living,  it  is  not  a  benefit,  but  a  hindrance. 
In  every  case  investigated  by  the  writer  in  which  the  borrower 
was  a  married  man,  the  high  rate  charged  by  the  loan  com- 
pany was  a  rather  serious  burden  upon  the  family.  Many  em- 
ployees who  secure  loans  find  it  impossible  to  save  enough 
money  to  pay  more  than  the  interest,  and  are  thus  con- 
stantly in  debt  for  the  original  loans.  The  experience 
of  an  employee  of  a  large  manufacturing  establishment 
on  Beaver  street  illustrates  the  burden  which  such  a 
condition  imposes.  He  secured  a  loan  of  $24.00,  for 
which  he  agreed  to  pay  $30.00  in  one  month.  When  the 
$30.00  became  due,  it  was  impossible  for  him  to  pay  the  entire 
amount  from  his  wages  and  at  the  same  time  pay  necessary  living 
expenses.  The  loan  company  gave  him  a  new  loan  of  $24.00 
upon  payment  of  $6.00,  which  canceled  the  old  loan  and  placed 
him  in  the  same  position  in  which  he  was  at  the  begin- 
ning of  the  preceding  month.  This  employee  has  paid  $6.00 
each  month  for  two  years,  making  $144.00  which  he  has  paid 
upon  the  original  loan  of  $24.00,  and  he  is  still  indebted  to  the 
loan  company  for  $30.00.  This  process  will  be  continued  in- 
definitely unless  he  is  able  to  pay  $30.00  at  one  time.  An  intelli- 
gent man  on  finding  that  he  could  not  pay  the  entire  amount  in 
one  payment  would  save  a  small  sum  each  month  until  sufficient 
provision  had  been  made  to  cancel  the  entire  debt,  but  as  in  the 


EFFECTS  OF  THE  LOAN   COMPANIES.  8l 

case  just  cited  the  employee  often  lacks  business  capacity  and, 
weakened  by  his  unfavorable  circumstances,  he  follows  the  line 
of  least  resistance  and  by  paying  $6.00  interest  each  month  he 
secures  a  new  loan. 

The  prevalence  of  this  condition  of  affairs  is  shown  by  a 
careful  examination  of  the  books  of  one  of  the  prominent  loan 
offices  in  the  city.  (a)  In  a  list  of  four  hundred  borrowers, 
one  hundred  and  sixty-three  had  been  with  the  company  over 
two  years  and  an  equal  number  from  a  year  to  a  year  and  a 
half.  A  manager  of  a  prominent  office  in  the  city,  when  asked 
the  reason  why  the  company  did  not  advertise,  replied  that 
there  was  no  need  to  advertise  as  the  majority  of  the  cus- 
tomers took  out  a  new  loan  as  soon  as  the  old  one  was  paid; 
that  it  was  not  uncommon  for  them  to  take  a  new  loan  to  pay 
the  old  one  in  order  to  avoid  paying  more  than  the  difference. 

In  case  the  loan  company  demands  the  entire  amount  in 
one  payment,  the  only  alternative  for  the  borrower  is  to 
secure  a  loan  from  another  company.  When  the  process  of 
borrowing  from  one  loan  company  to  pay  another  is  begun, 
it  is  not  long  until  the  employee  is  so  hopelessly  involved  that 
it  is  impossible  for  him  to  secure  his  release  unless  he  receives 
outside  aid.  An  employee  of  the  New  York  Central  R.  R.  Co. 
began  this  process  recently,  and  in  a  very  short  time  it  was 
necessary  for  a  charitable  society  to  advance  him  $240  in 
order  to  save  him  his  position  and  secure  his  release. 

The  experience  of  an  employee  of  a  large  transportation 
company  illustrates  the  hardship  to  the  family  when  the  practice 
of  borrowing  from  one  loan  company  to  pay  another  is  begun. 
Sickness  in  the  home  made  a  small  loan  necessary.  The  office 
of  Howard,  No.  73  West  nth  Street  was  visited  and  a  loan 
of  $24.00  secured.  The  borrower  agreed  to  pay  $30.00  in  one 
month.  His  salary  was  received  late  in  the  afternoon  of  the  day 
the  amount  was  due.  This  made  it  impossible  to  get  the  money 
to  the  office  of  H.  A.  Courtright  at  Providence,  R.  I.,  on  the 
same  day.  The  following  morning,  a  collector  from  the  Coast 
Cities  Collection  Company  called  at  the  office  of  the  bor- 

(a)  A  signed  statement  by  the  manager  of  the  loan  office  on  file  in  the 
Bureau  of  Social  Research. 


82  SALARY  LOAN  BUSINESS  IN  NEW  YORK  CITY. 

rower  and  demanded  $30.00  on  the  loan,  $1.49  protest 
fee,  $5.00  collection  fee,  and  $1.00  brokerage,  making  a 
total  of  $37.49.  It  was  impossible  for  him  to  pay  this 
amount  from  the  $60.00  wages  and  still  meet  his  living 
expenses.  The  loan  company  offered  to  make  him  a  new 
loan  of  $24.00  if  he  would  pay  the  $14.49  difference.  This 
he  did,  for  which  he  agreed  to  pay  $30.00  January  i, 
1906.  The  same  treatment  was  accorded  him  January  I,  that 
he  received  December  I.  In  order  to  pay  the  $37.49  in  full 
January  I,  to  insure  himself  against  a  repetition  of  extortion 
the  following  month,  he  secured  a  loan  of  $30.00  from  A.  \V. 
Connable  for  which  he  agreed  to  pay  $20.00  February  I,  1906, 
and  $20.00  March  I,  1906.  February  i,  1906,  A.  W.  Connable 
was  paid  the  first  payment  of  $20.00.  The  manager  very 
kindly  offered  to  give  him  a  new  loan  of  $30.00  if  he  wished 
to  pay  the  $20.00  which  was  due  March  I,  and  in  this  way 
the  old  debt  would  be  canceled.  He  accepted  the  loan  and 
again  agreed  to  pay  $20.00  a  month  for  two  months  because, 
as  he  put  it,  "I  got  ten  dollars  and  I  needed  it."  At  the  end 
of  nineteen  months,  June,  1907,  he  had  secured  about  $150.00 
cash  and  had  paid  out,  as  nearly  as  he  could  calculate,  about 
$665.00.  He  had  secured  loans  from  at  least  ten  different 
companies.  His  position  was  seriously  endangered  and  his 
family  was  in  such  destitute  circumstances  that  an  appeal  was 
made  to  the  Charity  Organization  Society  for  assistance.  An 
investigation  made  by  this  society  showed  that  in  addition  to  the 
large  amount  paid,  the  loan  companies  still  claimed  about  $150.00, 
which  it  was  necessary  to  pay  in  order  to  save  the  man's  position. 
An  employee  who  recently  lost  a  good  position  because  of 
a  file  upon  his  wages  by  the  loan  companies  made  the  follow- 
ing statement  to  the  writer:  "I  cannot  understand  what  has 
become  of  my  wages.  I  know  I  am  so  seriously  involved  that 
if  I  do  secure  a  new  position  I  can  never  hope  to  pay  the  diff- 
erent companies  all  they  demand  and  at  the  same  time  sup- 
port my  family.  I  have  had  no  money  and  my  wife  has  had 
barely  enough  to  pay  our  living  expenses.  It  has  been  one 
constant  round  of  paying  the  different  companies.  When 


EFFECTS  OF  THE  LOAN  COMPANIES.  83 

they  threatened  to  file  upon  my  wages  if  I  didn't  pay  them 
more,  I  would  go  to  a  new  company  and  by  signing  a  paper 
that  I  had  no  loan  with  any  other  company  and  agreeing  to 
pay  back  about  double  what  I  received  I  would  secure  enough 
ready  cash  to  keep  the  other  companies  from  notifying 
my  wife  and  employer  of  my  assignment.  When  I  was  un- 
able to  continue  this  they  all  filed  upon  my  employer  at  once. 
What  can  I  do?  There  is  no  use  of  getting  another  position,, 
as  the  'tracer'  will  find  me  and  I  will  be  discharged." 

The  promise  of  secrecy  so  largely  exploited  by  the  loan 
companies  has  not  been  found  conducive  to  family  happi- 
ness. The  husband  secures  a  loan  thinking  he  can  repay  it 
without  his  wife's  knowing  of  the  transaction  and  when  he 
fails  to  account  for  his  weekly  wages  the  wife  immediately 
suspects  that  he  is  gambling  or  spending  the  same  for  some 
other  illegitimate  purpose.  In  a  case  recently  investigated,  it 
was  absolutely  impossible  to  convince  the  wife  that  the  hus- 
band had  been  true  to  her.  The  only  reply  she  would  make, 
was  that  if  he  did  not  bring  his  money  home  he  must  be  giv- 
ing it  to  someone  else.  In  another  case,  the  husband  expected 
to  pay  the  loan  company  in  full  before  his  wife  would  sus- 
pect him  of  not  accounting  for  all  his  wages  each  week.  She 
could  not  understand;  she  only  knew  he  did  not  bring  his 
money  home.  Influenced  by  her  suspicions  and  unknown  to 
her  husband,  she  took  the  three  small  children  and  left  the 
city.  It  has  been  impossible  to  re-establish  the  home.  The 
common  practice  of  sending  a  young  woman  collector  who 
calls  at  the  place  of  business  or  at  the  home  and  demands  to 
see  the  husband  on  a  "personal  matter"  or  a  "matter  of  busi- 
ness" has  a  tendency  to  cause  a  misunderstanding  in  the  home. 
It  would  interfere  far  less  with  the  happiness  of  the  home 
should  the  collector  frankly  tell  the  wife  the  cause  of  her  mis- 
sion rather  than  to  arouse  her  suspicions  by  practicing  the 
much  boasted  virtue  of  "secrecy." 

The  effect  upon  the  individual  who  secures  the  loan  is 
most  important.  He  it  is  who  is  constantly  under  its  influ- 
ence, and  there  are  beyond  a  doubt,  scores  of  employees  whose 


84  SALARY  LOAN  BUSINESS  IN   NEW  YORK  CITY. 

economic  efficiency  is  being  seriously  impaired  by  the  con- 
stant thought  of  what  would  happen  to  them  if  their  employer 
and  family  should  know  of  the  loan.  A  letter  received  from 
an  employee  of  a  large  publishing  house  in  the  city  is  typical 
of  a  number  of  cases  that  could  be  cited,  showing  this  effect 
upon  the  individual.  "The  reason  I  did  not  send  you  my  loan 
story  was  that  the  last  chapter  is  not  written  and  cannot  be 
written  until  the  curtain  rings  down.  The  worry  that  the 
loan  curse  has  brought  me  has  shortened  my  life  at  least  ten 
years.  At  the  present  time  it  is  costing  me  about  $5.00  a  week 
interest  to  keep  them  satisfied." 

The  writer  of  this  letter  is  a  married  man  with  a  large  family. 
He  has  a  permanent  position  and  receives  $22.50  per  week.  Sick- 
ness made  a  small  loan  necessary  and  he  secured  $24.00  for 
which  he  paid  $30.00  in  five  weekly  installments.  The  last  pay- 
ment was  due  December  4th  and  on  December  3rd  the  payment 
was  made.  December  4th  a  file  was  placed  upon  his  wages  for 
$24.66.  When  the  loan  company  was  consulted  the  manager 
stated  that  the  amount  demanded  was  the  extra  charge  for  de- 
linquent payments.  The  delinquent  payments  referred  to  were 
the  outcome  of  the  following  situation:  that  one  week  $5.50 
were  paid  instead  of  $6.00  and  the  week  following  $6.50  were 
paid  to  make  up  the  difference.  Similar  treatment  has  made  it 
impossible  for  him  to  regain  his  economic  independence.  (a) 

An  extract  from  another  letter  shows  the  mental  condition  of 
an  employee  of  the  New  York  Central  Railroad,  who  holds  a  re- 
sponsible position,  "Conditions  made  me  almost  a  nervous 
wreck.  I  wanted  to  be  honest  with  these  people  but  they 
wouldn't  give  me  a  chance.  I  kept  going  deeper  and  deeper,  a 
fact  caused  by  the  methods  of  the  money  sharks.  I  am  nearly 
crazy  with  suspense  as  to  which  way  to  turn." 

In  addition  to  the  worry  caused  him,  there  is  a  very  strong 
temptation  on  the  part  of  the  borrower  to  commit  a  number  of 
different  crimes  which  under  ordinary  conditions  he  would  have 
no  thought  of  doing.  Cases  have  been  investigated  by  the 

(a)  Receipts,  copy  of  file,  letter  to  employer  from  loan  company,  and  other 
legal  evidence  substantiating  the  facts  stated  in  this  case  are  on  file  in  the 
Bureau  of  Social  Research. 


EFFECTS  OF  THE  LOAN   COMPANIES.  85 

writer  in  which  the  borrower  has  perjured  himself,  gambled  or 
used  other  illegitimate  methods  of  securing  the  necessary  amount 
to  satisfy  the  greed  of  the  money  lender  in  order  to  save  his 
home  and  position. 

The  importance  of  the  threat  of  notifying  the  employer, 
which  in  a  large  number  of  cases  would  result  in  the  discharge 
of  the  employee,  cannot  be  over-estimated.  This  has  been 
especially  evident  during  the  past  few  months  when  it  has  been 
extremely  difficult  to  secure  a  new  position.  A  case  came  to 
the  attention  of  the  Charity  Organization  Society  recently  which 
illustrates  the  effect  upon  the  individual  of  the  salary  loan  bus- 
iness. An  employee  of  a  large  transportation  company  had  se- 
cured a  loan  and  was  unable  to  meet  his  payments  promptly. 
The  loan  company  filed  upon  his  wages,  and  he  was  discharged. 
After  having  spent  several  days  in  search  of  work  he  stated 
to  a  representative  of  the  above  mentioned  organization,  "What 
is  the  use  ?  I  have  tried  everywhere  and  I  have  good  recommen- 
dations but  when  the  cause  for  leaving  my  former  position  is 
known,  I  meet  the  same  reply,  'We  will  have  nothing  to  do  with 
anyone  who  borrows  money  from  the  Loan  Sharks/  I  may  as 
well  give  up  and  not  try  further,  for  if  I  do  secure  a  new  posi- 
tion the  'tracer'  will  find  me  and  my  wages  will  be  filed  upon 
again  and  I  will  be  discharged.  I  would  take  an  assumed  name, 
but  with  that  awful  description  they  have  of  me  on  their  appli- 
cation blank,  they  would  find  me  no  matter  where  I  went." 

In  several  of  the  cases  investigated  the  writer  was  convinced 
that  the  worry  caused  the  employee  by  the  constant  "hounding" 
of  the  loan  companies  was  an  important  factor  in  causing  him 
to  become  intemperate.  Another  very  important  effect  of  the 
salary  loan  business  as  it  is  conducted  in  New  York  City  at  the 
present  time,  is  the  securing  of  unnecessary  loans,  and  this  is 
due  chiefly  to  the  ease  with  which  a  loan  may  be  secured  and  the 
promise  of  secrecy  which  accompanies  it.  Many  young  em- 
ployees secure  loans  when  in  reality  they  would  be  better  off 
had  it  been  impossible  for  them  to  secure  a  loan.  It  is  so  easy 
to  secure  a  small  loan  to  play  the  races,  to  buy  a  present  for 
a  friend  or  to  take  a  vacation  that  a  large  number  of  young 


86  SALARY  LOAN  BUSINESS  IN  NEW  YORK  CITY. 

men  do  not  resist  the  temptation.  It  should  be  made  extremely 
difficult  for  this  class  of  persons  to  secure  loans,  but  care  should 
be  taken  not  to  add  an  undue  burden  to  those  who  are  in  actual 
need. 

The  effect  upon  the  community  of  the  existence  of  the  salary 
loan  business  is  the  sum  total  of  the  effect  upon  the  individual, 
the  employer  and  the  home.  It  is  an  influence  tending  to  lessen 
efficiency,  increase  crime,  endanger  the  home,  enrich  one  class 
of  people  at  the  expense  of  another  and  as  such  constitutes  a 
question  for  serious  consideration  by  the  entire  community. 


X. 

PROPOSED  REMEDIES. 

Legislation,  competition  based  upon  philanthropic  interest, 
and  publicity  are  the  chief  means  by  which  the  evils  of  loaning 
money  secured  by  an  assignment  of  wages  may  be  decreased 
if  not  entirely  eliminated.  Cooperation  of  employers  with  em- 
ployees is  a  very  practical  method  of  securing  justice  to  the  bor- 
rower, but  modern  industry  is  so  extensive  that  little  positive 
relief  can  be  expected  from  this  method.  In  spite  of  all  the 
difficulties,  however,  the  writer  has  found  in  this  investigation 
a  number  of  employers  who  have  been  very  willing  to  aid  in 
securing  justice  to  their  employees,  and  in  the  majority  of  the 
cases  in  which  such  cooperation  was  secured  the  loan  company 
settled  for  materially  less  than  had  previously  been  demanded. 

Some  method  of  prohibiting  the  loan  companies  from  send- 
ing circulars  and  letters  to  employees,  also  from  publishing  abso- 
lutely misleading  advertisements  in  the  daily  press  would  aid 
very  materially  in  solving  the  problem.  The  ordinary  man  read- 
ing the  material  which  they  print  is  very  much  influenced  by  their 
promise  of  secrecy  and  of  easy  payments.  When  he  has  once 
secured  the  loan,  it  is  too  late  for  him  to  retrace  his  steps.  A 
weekly  magazine  (a)  recently  suggested  the  advisability  of  secur- 
ing the  cooperation  of  the  post-office  department  in  prohibiting 
the  printing  and  circulating  of  misleading  material.  To  date 
nothing  has  been  done  in  this  direction  and  it  is  probable  that 
such  prosecution  would  be  extremely  difficult. 

What  are  the.  facts,  is  the  question  of  supreme  importance 
in  connection  with  the  salary  loan  business,  as  with  any  other 

(a)    See  Collier's  Weekly,  December  28,  1907. 


88  SALARY  LOAN  BUSINESS  IN   NEW  YORK  CITY. 

social  problem.  Society  must  know  the  methods  of  business 
practiced  by  the  different  organizations  which  exploit  the  poor 
and  those  unable  to  protect  themselves,  in  order  to  regulate 
such  business  intelligently.  Publicity  is  the  best  method  of  solv- 
ing a  great  many  social  questions ;  or,  rather,  publicity  is  the 
means  by  which  a  large  number  of  social  problems  solve  them- 
selves. When  the  evils  of  congestion  are  known,  a  long  step 
has  been  taken  toward  their  elimination.  When  the  public 
begins  the  study  of  tuberculosis,  its  baneful  influence  is  greatly 
weakened.  When  society  knows  some  of  the  practices  of  those 
who  exploit  the  poor,  the  problem  of  poverty  is  less  difficult  to 
solve. 

In  a  recent  address  at  the  opening  of  the  Congestion  Exhibit 
at  the  Museum  of  Natural  History,  March  9,  1908,  Governor 
Hughes  stated  that  he  was  both  depressed  and  encouraged  at 
the  exhibit  which  he  had  examined.  He  was  depressed  that  such 
conditions  existed,  but  encouraged  that  the  people  of  New  York 
City  were  becoming  interested  in  those  conditions.  A  general 
public  interest  in  any  intolerable  condition  is  the  best  guarantee 
that  such  conditions  will  be  remedied. 

The  salary  loan  business  thrives  upon  secrecy  and  any  effort 
which  tends  to  destroy  this  secrecy  will  in  so  far  aid  in  regulating 
the  business.  The  manager  of  a  prominent  loan  office  in  the 
city,  when  asked  the  reason  for  the  company's  refusing  to  assume 
any  attitude  which  would  make  the  business  public,  replied 
that  the  company  would  much  rather  lose  the  money  involved 
in  any  individual  loan  than  to  have  anything  done  whereby  the 
rates  charged  and  the  methods  of  business  would  be  made 
known.  She  added  further  that  the  entire  success  of  the  salary 
loan  business  depended  upon  their  ability  to  keep  the  general 
public  uninformed  as  to  their  methods. 

The  manager  of  another  large  office  has  said  that  during  a 
recent  campaign,  when  a  certain  candidate  had  threatened  to  in- 
vestigate their  business,  the  company  made  plans  to  close  their 
office  in  case  he  was  elected.  This  same  manager  stated  that 
the  secret  of  success  in  the  salary  loan  business  was  to  keep  the 
general  public  uninformed  as  to  methods. 


PROPOSED  REMEDIES.  89 

When  a  recent  campaign  of  publicity  was  begun  by  the 
New  York  Herald  against  the  salary  money  lenders,  the  manager 
of  one  of  the  largest  offices  in  the  city  stated  that  if  the  cam- 
paign continued  it  would  be  necessary  for  them  to  close  their 
two  large  offices.  A  collector  who  worked  for  nearly  two  years 
for  a  prominent  loan  office  in  the  city  was  unable  during  the 
entire  time  to  ascertain  the  rates  charged,  the  contents  of  the  pa- 
pers signed  by  the  borrowers,  the  volume  of  business  done,  or 
the  real  owners  of  the  office,  so  carefully  did  they  guard  their 
secrets. 

A  very  effective  method  of  regulating  the  loan  business  would 
be  to  establish  an  office  with  charges  sufficient  to  pay  a  reason- 
able return  upon  the  investment  and  at  the  same  time  to  loan 
only  to  those  who  are  found  on  careful  investigation  to  be  act- 
ually in  need  of  money.  This  method  would  provide  a  means 
of  helping  the  honest  borrower  and  would  discourage  borrow- 
ing on  the  part  of  those  who  do  not  need  the  money.  It  is 
the  belief  of  a  considerable  number  of  social  workers  that  when 
an  employee  is  in  need  of  a  loan  his  wife  and  family  should  be 
consulted  and  in  most  cases  his  employer.  This  would  obvi- 
ate all  the  difficulty  of  misunderstanding  and  loss  of  confidence 
in  the  husband  on  the  part  of  the  family  and  the  employer,  which 
is  one  of  the  worst  evils  of  the  present  system.  The  idea  is  not 
a  new  one.  On  a  slightly  different  basis,  viz.  loans  secured  by 
mortgage  on  houshold  furniture  or  a  pledge  of  personal  property, 
there  have  been  several  very  successful  offices  established.  The 
St.  Bartholomew  Loan  Association  of  New  York  City  has  had 
a  successful  experience  of  nearly  fourteen  years.  It  has  paid 
a  reasonable  rate  of  interest  upon  the  capital  invested,  put  aside 
a  good  surplus,  and  at  the  same  time  has  done  a  real  service  to 
the  community.  The  charges  have  been  nominal  compared  with 
those  of  other  companies  of  the  city  doing  a  similar  business.  The 
character  of  the  individuals  who  have  been  aided  by  this  organ- 
ization in  the  past  nine  years  is  indicated  by  the  fact  that  the 
losses  for  the  entire  period  have  been  less  than  ^s  of  one  per  cent. 
The  manager,  Mr.  Daniel  R.  Kennedy,  is  enthusiastic  over  the 
work  and  is  in  a  position  to  show  facts  and  figures  (a)  from  nine 

(a)    See  Year  Book  of  St.  Bartholomew's  Parish,  1907,  page  192. 


-'QO  SALARY  LOAN  BUSINESS  IN  NEW  YORK  CITY. 

years'  experience  which  are  proof  of  its  success.  Its  work  at 
the  present  time  is  limited  by  a  lack  of  funds.  The  associa- 
tion has  been  conducted  in  connection  with  the  St.  Bar- 
tholomew's church  and  the  officers  of  the  church  have  decided 
not  to  extend  the  business.  It  is  their  belief  that  its  practicability 
has  been  demonstrated  from  a  business  standpoint,  and  that  it 
should  be  enlarged  by  an  organization  entirely  separated  from 
the  church;  that  such  an  organization,  although  primarily  in- 
terested in  philanthropic  work,  should  at  the  same  time  receive 
•a  reasonable  return  upon  capital  invested. 

The  Provident  Loan  Society,  organized  in  1894  to  loan  money 
upon  pledges  of  personal  property,  has  also  had  a  most  success- 
ful career.  It  has  paid  a  reasonable  return  upon  the  capital  in- 
vested and  has  been  of  great  service  to  those  who  were  com- 
pelled to  secure  a  loan.  Over  $10,600,000  was  loaned  during 
the  last  year  and  there  is  need  for  a  much  larger  amount.  The 
lack  of  available  capital  is  the  one  obstacle  which  has  prevented  a 
further  extension  of  the  business. 

The  suggestion  of  forming  similar  organizations  in  which  an 
assignment  of  wages  would  be  given  as  security  for  the  loan,  has 
met  with  a  hearty  response  from  business  men  and  employers, 
and  it  is  hoped  that  some  such  organization  will  be  formed  in 
the  near  future,  to  extend  the  helpful  work  which  has  been  done 
by  the  Provident  Loan  Society  and  the  St.  Bartholomew  Loan 
Association. 

The  Chattel  Mortgage  Loan  Association  of  Baltimore,  Mary- 
land, managed  by  Mr.  W.  N.  Finley,  is  another  illustration  of 
what  can  be  done  in  the  way  of  competition.  This  association 
lias  been  in  existence  for  ten  years  and  has  been  very  successful. 
It  has  paid  a  reasonable  return  upon  the  capital  invested 
and  has  been  an  effective  force  in  regulating  the  loan  business 
in  Baltimore.  Mr.  Finley  has  been  influential  in  organizing  sim- 
ilar associations  in  different  cities.  The  following  is  quoted 
from  a  manuscript  written  by  him  February,  1908:  "The 
Chattel  Loan  Association  of  Baltimore  City  was  organ- 
ized in  1898  for  the  express  purpose  of  fighting  the 


PROPOSED  REMEDIES.  9 1 

chattel  mortgage  loan  evil.  Our  aim  was,  has  been,  and  now 
is  so  to  improve  local  conditions  as  to  make  it  possible  for  a 
poor  man  in  this  city  to  borrow  money  at  a  low  rate  which  he 
could  pay  on  long  time  without  being  unduly  burdened,  and  to 
utterly  abolish  the  nefarious  business  of  the  "shark"  money- 
lender hereinbefore  described.  We  believed  this  could  be  ac- 
complished by  having  an  institution  in  operation  in  Baltimore 
which  would  lend  money  at  such  low  rate  upon  such  long  time, 
and  we  also  believed  that  remedial  legislation  could  be  secured, 
"but  we  relied  more  upon  the  effect  of  active,  strenuous  competi- 
tion day  by  day  than  upon  the  law,  because  no  law  is  automatic 
and  those  who  borrow  money  upon  security  of  their  household 
effects  are  slow  to  take  the  initiative.  The  result  has  been  vast 
improvement.  One  of  the  first  consequences  was  the  closing 
of  the  largest  loan  offices  in  the  city,  both  of  which  were 
found  to  be  owned  by  the  same  man.  I  believe  that  the  work 
we  have  done  here  in  Baltimore  is  needed  in  every  large  city 
in  the  land  and  that  next  to  rum  there  is  no  greater  enemy  to 
the  humble  homes  of  our  country  than  this  loan  evil." 

Several  other  cities  have  followed  the  example  of  Baltimore 
and  New  York  and  have  organized  similar  agencies  to  regulate 
the  loan  business.  A  few  of  the  important  ones  are: 

Workingman's  Collateral  Loan  Company,  Cleveland,  Ohio. 
Provident  Loan  Society,  Detroit,  Michigan.  The  Citizen's 
Mortgage  Loan  Company,  Cincinnati,  Ohio.  Collateral  Loan 
Association  and  Workingman's  Loan  Association  both  of  Bos- 
ton, Mass. 

The  third  method  of  control  suggested  is  legislation.  Here 
one  is  confronted  with  a  variety  of  experiences  none  of  which 
has  proved  entirely  successful.  Massachusetts  secured  the  enact- 
ment of  a  law  (a)  in  1906  from  which  the  people  of  Boston  ex- 
pected relief,  but  on  account  of  failure  to  enforce  the  law  it 
has  made  little  change  in  the  salary  loan  business  in  that  city. 
Some  of  the  other  states  have  passed  laws  to  remedy  certain 

(a)   See  Appendix  XVIII,  page  120. 


92  SALARY  LOAN  BUSINESS  IN  NEW  YORK  CITY. 

definite  evils,  and  the  skill  of  the  money  lender  has  devised  some 
scheme  to  evade  the  new  law  almost  before  it  went  into  effect. 
Still  others  have  attempted  to  prohibit  the  business  entirely,  and 
in  the  majority  of  these  instances  the  loan  companies  have  open- 
ly ignored  the  law. 

It  is  the  belief  of  those  most  intimately  connected  with  this 
investigation  that  some  general  law  should  be  enacted  which 
would  regulate  the  entire  business  of  loaning  money  in  small 
amounts  whether  secured  by  a  pledge  of  personal  property,  a 
chattel  mortgage,  or  an  assignment  of  wages.  Such  legislation 
would  place  individuals  in  a  slightly  different  line  of  business 
on  the  same  basis  and  make  provision  for  definite  regulation 
of  loans  of  small  amount  as  is  now  provided  for  larger  sums. 

With  this  object  in  view  Dr.  Samuel  McCune  Lindsay,  pro- 
fessor of  Social  Legislation,  Columbia  University,  and  Mr. 
Frank  Tucker,  Vice-president  of  the  Provident  Loan  Society, 
have  drafted  a  bill  (a)  which  provides  for  the  regulation,  by  the 
Superintendent  of  Banks  of  the  state,  of  all  concerns  which  loan 
money  whether  secured  by  pledges  of  personal  property,  chat- 
tel mortgage  on  household  furniture  or  an  assignment  of  wages. 
The  bill  does  not  specify  the  conditions  upon  which  the  business 
shall  be  conducted  but  provides  that  the  Superintendent  of 
Banks  shall  make  such  rules  and  regulations  as  he  shall  from 
time  to  time  deem  necessary  in  order  to  secure  adequate  regu- 
lation. The  object  of  the  bill  is  to  secure  regular  inspection, 
establish  a  maximum  charge  for  different  loans,  prohibit  extra 
charges  in  individual  cases,  require  a  license  of  every  money 
lender  who  deals  in  small  amounts  and  on  the  whole  establish 
justice  for  both  the  borrower  and  the  lender. 


(a)   For  copy  of  bill,  see  Appendix  XX,  page  123. 


APPENDICES. 
APPENDIX  I. 

The  following  is  a  copy  of  the  "Application  Blank"  used  by 
a  salary  loan  broker  in  Philadelphia.  It  was  secured  through 
an  investigation  made  by  Dr.  F.  J.  Warne  for  the  Bureau  of 
Social  Research  in  connection  with  the  New  York  School  of 
Philanthropy.  The  document  is  practically  the  same  as  those 
used  in  New  York  city  since  several  of  the  loan  brokers  have 
offices  in  both  cities. 

190.... 

To 

I hereby  authorize  you  to  sell  or 

negotiate  for  me  a  loan  on  my Note payable  to  the  order  of 

myself  or  any  one  whom  you  may  designate  and  as  an  inducement 
for  procuring  said  loan,  I  agree  as  the  Agent  and  Bailee  of  legal  holder 
of  note,  his  executors,  administrators,  or  assigns,  to  collect  the  wages 
this  day  assigned,  to  pay  the  amount  of  my  future  indebtedness  on  or 
before  one  day  after  collecting  said  wages,  and  I  do  solemnly  swear 
my  answer  to  the  following  questions  are  true: 

Name  of  my  present  employer  is and 

have  been  in  their  employ  for employed 

as under  in 

Department,    for I    am 

working  and in  good  standing, 

to  the  best  of  my  knowledge  and  belief  my  position  is ;   I 

have overdrawn  my  account  and  am indebted  to  my  em- 
ployer  ; 


94  SALARY  LOAN  BUSINESS  NEW  YORK  CITY. 

Are  you  related  to  your  employer  or  his  agents? 

My  salary  is  $ payable day  of  each , 

Names  of  my  present  fellow  employees  are 


Have  you  any  intention  of  leaving  your  position? I  was 

formerly  employed  by as and  left  their  services 

because  I I  reside  at flat where 

I  am for Name  and  address  of  landlord 

is  Prior  to  that  I  lived  at 

for and   have   lived    in for 

My  age  is Wife's  name  is My  wife's 

parents  name  and  residence  is 

.1  have children;   they  are 

employed   at attend  the 

school.      My  parents  name  and  resi- 
dence  is 

Brothers    

Sisters    

Relatives    


Names  of  friends  and  acquaintances  are. 


Trades  people  with  whom  I  deal 


APPENDICES.  95. 

If  insured,  what  company  and  amount? - 

Member  of  any  Fraternal  Orders  or  International  Union? 

address  and  name  of  our  recording  or  financial  sec- 
retary  is 

My  personal  property  is  worth  $ What  real  estate  and  where 

situated?    

How  came  you  to  apply  here? 

Have  you  in  any  manner  assigned  or  disposed  of  your  salary,  due  or 

to  become  due? 

Did  you  ever  have  a  loan,  salary  or  chattel  before? If  so,  with 

what  company? 

Do  you  owe  any  money  lender,  agent,  attorney,  broker,  corporation  or 

private  individual,  if  so,  to  whom  and  what  amount? 

Have  you  any  unsatisfied  judgments  standing  against  you? ,  if 

so,  what  amount,  $ My  total  indebtedness  does  not  ex- 
ceed  $ Are  you  endorser  or  guarantor 

with  or  for  any  other  person? 

These  statements  are  made  for  the  sole  purpose  of  securing  credit 
through  you,  and  with  the  full  knowledge  on  my  part  that  if  they  are 
not  true  and  I  am  granted  the  loan,  it  will  be  securing  money  under 
false  pretenses.  To  the  best  of  my  knowledge,  belief  and  intention, 
my  position  with  my  present  employer  is  a  permanent  one  and  will  be 
so  during  the  time  the  loan  I  make  application  for  will  run.  I  will 
not  during  the  life  of  my  contract  made  with  you  or  your  client,  col- 
lect or  attempt  to  collect  my  salary  in  advance,  voluntarily  quit  my 
position  or  take  advantage  of  the  bankruptcy  law. 


(Seal) 
(Seal) 


STATE  OF  1 

County  of  ] 


Subscribed  and  sworn  to  before  me  this day  of 190.  ~ 

Notary  Public. 


APPENDIX  II. 

Power  of  Attorney  used  by  Mr.  A.  W.  Connable: 

Know  all  Men  by  these  Presents,  that  I, 

for  and  in  consideration  of  the  sum  of  one 

dollar  paid  to  me,  receipt  whereof  is  hereby  acknowledged,  and 
for  the  purpose  of  reimbursing  A.  W.  Connable,  of  New  York 
City,  for  all  loss  or  losses  sustained  by  him  on  account  of  my 
failure  to  perform  any  promises  or  warranties  heretofore  or 
hereafter  made  or  entered  into  by  me  to  or  with  the  said  A.  W. 
Connable,  and  for  the  reasonable  expenses  and  disbursements 
resulting  from  the  failure  or  breach  aforementioned,  or  from 
any  misappropriation  or  defalcation  on  my  part;  I  do  hereby 
make,  constitute  and  appoint  George  W.  Agnew,  Edmund  C. 
Corr,  Genevieve  F.  Law,  Clarice  Runge  and  Walter  M.  Connable, 
jointly  and  each  of  them  severally,  my  true  and  lawful  attorney 
and  attorneys  and  I  direct  them  or  either  of  them,  for  me  and 
in  my  name,  place  and  stead,  at  any  time  hereafter,  when  I  may 
be  indebted  to  the  said  A.  W.  Connable,  on  account  of  any  loss 
or  losses  by  him  sustained  as  above  set  forth :  ( i )  To  make  and 
execute  my  promissory  note,  due  in  10  days,  to  draw  interest  at 
the  rate  of  six  per  cent,  per  annum,  for  such  a  sum  of  money 
as  will  cover  any  loss  or  losses  by  him  sustained  as  above  set 
forth;  (2)  To  make  and  execute  as  collateral  security  for  said 
note  an  assignment  and  transfer  of  my  wages,  salary  or  com- 
mission, due  and  to  become  due  to  me  for  a  period  of  one  year 
from  any  individual,  firm  or  corporation  by  whom  I  may  then 
be  employed,  and  to  do  and  perform  all  and  every  act  and  deed 
of  whatsoever  name  and  nature,  legally  appertaining  to  the 
same;  (3)  To  sell  at  private  sale  my  said  promissory  note  and 
assignment  of  salary,  and  pay  the  proceeds  of  said  sale  to  said 
A.  W.  Connable  to  reimburse  him  for  any  loss  or  losses  by  him 
sustained  as  above  set  forth. 

Dated,  New  York  City,  the  day  of  (  ,  190     ) . 

[L.  s.] 

In  presence  of 


APPENDIX  III. 

Copy  of  Power  of  Attorney  used  by  H.  A.  Courtright : 
POWER  OF  ATTORNEY. 

WHEREAS,  I  desire  to  have  made,  executed  and  delivered,  and 
sold  certain  notes,  to,  the  aggregate  amount  of  or  less  for 

which  I  shall  be  responsible  as  maker  in  the  City  of  Providence, 
State  of  Rhode  Island,  without  being  there  and  then  present  per- 
sonally, now  therefore,  know  all  men  by  these  presents,  that  I 
have  made,  constituted  and  appointed  and  created  and  by  these 
presents  do  make,  constitute  and  appoint  M.  WILMARTH  of  the 
City  of  Providence,  State  of  Rhode  Island,  my  true  and  lawful 
and  duly  authorized  agent  and  attorney,  with  full  power  to  do 
and  perform  each  and  every  act,  and  thing  which  said  attorney 
may  deem  it  necessary  and  desirable  to  do  or  perform,  to  the  end 
that  I  may  accomplish  the  aforesaid  result.  And  said  attorney 
shall  have  full  power  to  do  each  and  every  thing  and  act  that  I 
might  or  could  do  if  personally  present. 

Without  in  any  wise  limiting  or  restricting  the  general  powers 
given  to  my  attorney  as  aforesaid,  but  solely  by  way  of  explana- 
tion as  to  certain  powers  included  in  the  above  general  power,  I 
hereby  give  my  said  attorney  aforesaid  full  right  power  and  au- 
thority for  me  and  in  my  name,  place  and  stead  to  do  and  per- 
form the  following  acts  and  things  and  every  one  of  them :  ( I ) 
To  make  and  execute,  signing  my  name  thereto,  a  promissory 
note  or  promissory  notes,  each  and  every  of  which  shall  be  pay- 
able in  the  City  of  Providence,  in  the  State  of  Rhode  Island  to 


98  SALARY  LOAN  BUSINESS  IN  NEW  YORK  CITY. 

the  aggregate  amount  above  stated.  Said  attorney  shall  have  full 
authority  and  power  to  determine  the  dates  when  said  note  or 
notes  shall  become  due  and  payable,  the  rate  of  interest  before 
and  after  maturity,  the  amount  or  rate  of  collection  fee,  if  any, 
the  name  or  names  of  the  payee  or  payees.  (2)  To  aid  in  the 
negotiation  and  sale  of  said  notes  my  said  attorney  aforesaid,  is 
hereby  authorized  at  such  time  or  times,  as  may  be  necessary  or 
as  he  may  think  proper  to  make  such  an  assignment,  agreement  or 
contract  or  arrangement  relating  to  my  wages,  now  earned,  now 
being  earned,  or  hereafter  to  be  earned,  under  my  engagement 
with  my  present  employer  or  under  any  engagement  under  any 
other  employer  with  whom  I  may  hereafter  be  engaged,  as  my 
said  attorney  may  think  necessary  or  desirable,  the  only  limita- 
tion on  this  point  being,  that  said  assignment,  contract,  agreement, 
or  arrangement  shall  not  affect  my  wages  to  any  amount  greater 
than  five  times  the  aggregate  of  the  notes  made  and  negotiated. 

With  the  above  limitations,  said  attorney  may  make  any 
arrangement,  contract  agreement  or  assignment  relative  to  my 
said  wages  that  I  could  personally  make,  if  present. 

(3)  Said  attorney  is  further  authorized  and  empowered  to 
make  and  execute  for  me,  signing  my  name  thereto,  a  bill  of  sale 
and  assignment  of  the  personal  property  set  forth  and  scheduled 
on  the  reverse  side  of  this  power  of  attorney;  and  I  hereby 
certify  that  I  am  the  sole  owner  of  said  property  and  that  it  is 
located  at  the  place  named  in  the  said  schedule.  Said  attorney 
is  hereby  authorized  to  determine  upon  and  insert  the  name  of 
the  assignee  of  said  bill  of  sale  and  shall  have  further  power  to 
determine  the  character  and  scope  of  the  contents  thereof. 
Said  attorney  is  authorized  to  agree  that  said  bill  of  sale  shall 
stand  as  security  for  the  payment  of  each  and  every  of  said 
note  or  notes  aforesaid  and  interest  thereon,  and  any  protest, 
collection,  or  attorneys  fees  which  may  arise  upon  non-payment 
thereof.  Said  attorney  is  hereby  empowered  to  determine  upon 
and  insert  the  name  of  the  beneficiary  in  said  agreement  also 
in  what  case  protest  fees,  collection  fees,  and  attorneys  fees 
shall  become  payable  and  in  what  amount.  And  said  attorney 
is  further  authorized  to  make  any  agreement  that  I  can  per- 


APPENDICES.  gg 

sonally  make,  relative  to  said  personal  property  standing  as 
security  for  said  indebtedness  and  as  for  the  possession  thereof, 
and  to  the  payment  of  the  taxes  and  insurance  upon  the  same, 
and  relative  to  the  sale  of  the  same  upon  default  and  to  the 
notice  of  said  sale  and  the  expenses  thereof. 

(4)  I  further  authorize,  empower  and  direct  my  said  attor- 
tney  to   jNEGOTIATE,    SELL   OR   PROCURE   THE    DIS- 
COUNT OF,  IN  THE  SAID  CITY  OF  PROVIDENCE,  IN 
THE  STATE  OF  RHODE  ISLAND,  the  said  note  or  notes 
aforesaid,  or  to  transfer  in  said  city  said  note  or  notes  as  evi- 
dence  of   indebtedness    for   the  best  price   obtainable   in   cash, 
and  in  negotiating,  selling,  procuring  the  discount,   or  of  de- 
livering the  said  note  or  notes,  my  said  attorney  shall  have  each 
and  every  right  and  power,  which  I  would  have  if  I  were  per- 
sonally present  and  attended  to  the  transaction  myself. 

Within  the  limitations  above  recited,  my  said  attorney  shall 
have  full  authority  to  arrange  with  the  purchaser  of  any  or  of 
all  of  said  notes,  so  that  my  wages  above  recited  or  any  assign- 
ment agreement  or  contract,  or  arrangement,  which  my  attor- 
ney may  make  on  my  behalf  concerning  them,  shall  be  or  stand, 
at  such  time  or  times  as  may  be  agreed  upon,  as  security  for 
any  indebtedness,  arising  by  reason  of  the  making  and  delivery 
of  the  notes. 

Said  attorney  shall  have  and  is  hereby  given  the  right  to 
receive  the  proceeds  of  said  negotiation,  discount  or  sale  and 
over  my  signature  give  full  receipt  therefor. 

(5)  I  hereby  agree  that  the  above  power  and  powers   of 
attorney  are  continuing  powers  until  any  and  all  indebtedness 
contracted  through  and  by  the  execution  of  the  same  is  finally 
and  completely  satisfied  and  paid,  and  said  attorney  is  authorized 
to  agree  for  me  with  any  purchaser  of  my  notes  or  the  receiver 
of  any  collateral   that  if  sufficient  funds   are  not  received  by 
virtue  thereof  to  satisfy  said  indebtedness  in  full,  then  that  from 
time  to  time,  further  assignments  of  wages  due  or  to  become  due, 
from  the  employer  with  whom  I  am  then  employed,  will  be  made 
and  delivered,  not  to  exceed  in  total  five  times  the  amount  of  the 


100  SALARY  LOAN  BUSINESS  IN  NEW  YORK  CITY. 

aggregate  of  the  notes,  and  the  said  attorney  is  authorized  to 
deliver  said  further  assignment  or  assignments  on  request.  I 
hereby  give  my  said  attorney  full  power  to  substitute  another 
attorney  or  agent  in  his  stead,  and  I  hereby  ratify  each  and  every 
act  or  thing  my  said  attorney  or  substitute  may  do  or  cause  to 
be  done. 

Dated  this  day  of          ,  190     . 

[SEAL] 
Witness, 

COUNTY  AND  STATE  OF  NEW  YORK, 
City  of  New  York. 

On  this  day  of  190      before 

me  personally  appeared  to  me 

known  and  known  to  me  to  be  the  individual  described  in  and 
who  executed  the  foregoing  agreement,  and  he  fully  acknowl- 
edged that  he  had  carefully  read  the  same,  and  the  whole  there- 
of, and  that  after  doing  so,  he  executed  the  same. 

Notary  Public,  New  York  County. 


APPENDIX  IV. 

Copy  of  the  document  used  by  the  brokers  who  conduct  busi- 
ness for  H.  A.  Courtright.  It  is  called  by  them  the  Continuing 
Power  of  Attorney : 

WHEREAS,  I  (we)  desire  to  from  time  to  time  obtain  money, 
and  to  that  end  to  make  arrangements  so  that  when  desired  said 
money  may  be  obtained  easily  and  promptly,  and  whereas  it  is 
and  may  hereafter  become  desirable  to  obtain  the  same  in  the  State 
of  Rhode  Island,  now  therefore  know  all  men  by  these  presents, 
that  I  (we)  the  undersigned  have  made,  constituted  and  appointed 
and  by  these  presents  do  make,  constitute  and  appoint  M.  WIL- 
MARTH  (our)  my  true  and  lawful  attorney,  for  (us)  me  and  in 
(our)  my  name,  place  and  stead,  to  do  or  perform  any  act  or 
thing  I  (we)  might,  may  or  can  personally  do,  and  with  (our) 
my  said  attorney  may  think  it  necessary  to  do  or  perform;  giv- 
ing and  granting  unto  (our)  my  said  attorney  full  power  and 
authority  to  do  and  perform  all  and  every  act  and  thing  whatso- 
ever requisite  and  necessary  to  be  done  in  and  about  the  premises, 
as  fully,  to  all  intents  and  purposes,  as  I  (we)  might  or  could 
do  if  personally  present,  with  full  power  of  substitution  and  revo- 
cation, hereby  ratifying  and  confirming  all  that  (our)  my  said 
attorney  or  his  substitute  shall  lawfully  do  or  cause  to  be  done  by 
virtue  hereof. 

IN  WITNESS  WHEREOF,  I  (we)  have  hereunto  set  (our)  my 
hand  and  seal  this  day  of  ,  190  . 

i 
Witness 

COUNTY  AND  STATE  OF  NEW  YORK,)      . 
City  of  New  York,  j  . 

On  this  day  of  ,  190     ,  before  me  per- 

sonally appeared 

to  me  known  and  known  to  me  to  be  the  individual  described  in 
and  who  executed  the  foregoing  agreement,  and  he  duly  acknowl- 
edged to  me  that  he  had  carefully  read  the  same,  and  the  whole 
thereof,  and  that  after  doing  so  he  executed  the  same. 

Notary  Public,  New  York  County. 


APPENDIX  V. 

Copy  of  Power  of  Attorney  used  by  D.  H.  Tolman  in  1898 (a)  : 

ARTICLES  OP  AGREEMENT  made  and  entered  into  this  10th  day 
of  June,  A.  D.  1898,  by  and  between  D.  H.  Tolman,  party  of  the  first 
part,  and  Milton  R.  Andrews,  of  No.  1606  North  Jefferson  Ave.,  St. 
Louis,  the  party  of  the  second  part,  WITNESSETH: 

"That  said  party  of  the  second  part  hereby  sells,  assigns  and  trans- 
fers to  said  party  of  the  first  part  for  the  sum  of  $140  and  other  good 
and  valuable  considerations,  the  receipt  of  which  is  hereby  acknowl- 
edged, any  and  all  of  his  salary,  which  amounts  to  $125  per  month 
and  becomes  due  and  payable  on  the  following  dates,  to  wit:"  (Here 
follows  twenty-four  installments  of  $62.50  each,  beginning  July  1,  1898, 
to  June  15,  1899). 

"Said  party  of  the  first  part  hereby  appoints  said  party  of  the  sec- 
ond part  his  attorney  in  fact  to  collect  the  said  salary,  when  it  shall 
become  due,  on  the  days  and  dates  above  specified,  from  Union  Casualty 
and  Surety  Company,  the  conditions  of  said  Power  of  Attorney  being 
that  said  party  of  the  second  part  shall  turn  over  to  said  party  of  the 
first  part  the  amount  of  money  designated  after  each  and  every  date, 
on  or  before  the  expiration  of  one  day  after  said  date.  On  the  failure 
of  the  said  party  of  the  second  part  to  turn  over  to  said  party  of  the 
first  part  said  money  as  provided,  the  said  Power  of  Attorney  to  collect 
said  salary  shall  become  null  and  void,  and  all  the  money  to  be  paid 
to  said  party  of  the  first  part  shall  become  due  and  payable  at  once, 
and  the  said  party  of  the  first  part  shall  collect  all  of  the  said  salary 
of  the  party  of  the  second  part  from  said  employers,  and  shall  apply 
the  same  to  the  liquidation  of  the  obligations  due  to  the  said  party 
of  the  second  part  to  the  party  of  the  first  part  until  the  total  amount 
collected  and  retained  by  said  party  of  the  first  part  shall  amount  to 
$140,  together  with  an  attorney  fee  aggregating  25  per  cent,  of  the 
amount  due  said  party  of  the  first  part  from  said  party  of  the  second 
part  at  the  time  of  filing  a  certified  copy  with  the  employers  of  the 
said  party  of  the  second  part,  as  liquidated  damages  and  to  cover  the 
expense  of  said  party  of  the  first  part  in  collecting  said  salary  and 
wages." 

"And  it  is  further  mutually  agreed  to,  by  and  between  the  parties 
of  this  contract,  that  in  case  the  said  party  of  the  second  part  shall 
at  any  time  before  the  full  amount  of  $140  has  been  received  by  said 
party  of  first  part  for  any  reason,  leave  or  discontinue  in  the  employ 
of  said  employer,  the  assignment  of  the  salary  or  wages  of  the  said 
party  of  the  second  part  shall  extend  and  apply  to  any  and  all  positions 

(a)   See  90  Missouri  App.  274. 


APPENDICES.  IO3 

hereafter  held  or  occupied  by  said  party  of  the  second  part  for  a 
period  of  ten  years  from  and  after  this  date,  and  the  said  party  of  the 
first  is  hereby  authorized  to  collect  the  salary  of  said  party  of  the 
second  part  from  any  and  all  persons  by  whom  said  party  of  the  sec- 
ond part  may  be  employed  during  said  ten  years,  until  the  amount 
collected  and  retained  by  the  party  of  the  first  part  shall  amount  to 
$140." 

"The  said  party  of  the  second  part  hereby  instructs  his  present 
employers,  or  any  other  person,  firm  or  copartnership,  company,  cor- 
poration, organization  or  official  by  whom  he  may  be  hereafter  employed, 
to,  on  presentation  of  a  copy  of  this  contract,  duly  verified  at  any  time 
before  the  expiration  of  ten  years  from  the  date  hereof,  pay  to  the 
order  of  said  party  of  first  part,  for  value  received,  the  amount  desig- 
nated as  due  in  the  affidavit  filed  with  the  verified  copy  of  this  con- 
tract, with  interest  at  6  per  cent,  per  annum  from  the  date  hereof, 
out  of  any  money  due  him  as  salary,  wages  or  commission,  or  to  be- 
come due  after  the  presentation  to  said  employer  of  a  verified  copy  of 
this  contract.  The  said  party  of  the  second  part  hereby  irrevocably 
waives  all  exemptions  or  other  rights  he  may  have  by  reason  of  any 
law  of  any  state  in  which  he  is  now  or  may  hereafter  be  employed  or 
live,  and  orders  such  payment  out  of  the  first  money  due  him." 

"Said  party  of  the  second  part  further  agrees  not  to  collect,  or 
attempt  to  collect,  any  part  of  his  salary,  wages  or  commission  due  him 
from  any  employer  after  a  verified  copy  of  this  contract  has  been  filed 
with  said  employer  until  amount  due  said  party  of  the  first  part  or  his 
assignees  or  representatives,  have  been  paid  in  full." 

"It  is  further  mutually  agreed  by  and  between  the  parties  of  this 
contract  that  when  the  amount  due  said  party  of  the  first  part  and 
party  of  the  second  part  as  shown  by  this  contract,  has  been  paid  in 
full,  this  contract  shall  become  null  and  void,  and  of  no  further  effect." 

IN    WITNESS    WHEREOF,  the  said  parties  of  this  contract  have  here- 
unto set  their  hands  and  seals  on  the  day  and  year  first  above  written. 
Signed  and  sealed  in  the  presence  of: 

D.    H.    TOLMAN, 

J.    OLIVEB,    Attorney,       [SEAL.] 
MILTON   R.   ANDREWS. 


APPENDIX  VI. 

Copy  of  the  document  the  endorser  is  asked  to  sign  by  the 
Federal   Discount  Company : 

AGREEMENT   OF   GUARANTY. 

1.    WHEREAS  hereinafter 

designated  as  the  First  Vendor,  is  desirous  of  selling  his  salary,  wages 
and  compensation,  due  and  to  become  due,  to  the  amount  of 

Dollars  ($  )  to  the  Federal  Discount  Com- 

pany, and  whereas  the  first  vendor  is  unable  to  adequately  satisfy  the 
said  Federal  Discount  Company  that  he  will  earn  the  moneys  sold  and 
to  be  sold. 

Now,  THEREFORE,  in  order  to  induce  the  said  Federal  Discount  Com- 
pany to  buy  said  salary,  wages  and  compensation  and  for  value  re- 
ceived, and  the  acceptance  of  this  instrument  by  the  Federal  Discount 
Company  hereinafter  designated  as  the  Vendee,  I  hereby  guarantee  that 
the  said  will  earn  the 

sum  of  Dollars  ($  )  as  afore- 

said; and  I  further  promis.e  that  the  said  first  vendor,  in  the  event  that 
he  collects  the  salary,  wages  and  compensation  so  sold,  will  bring  and 
deliver  the  same  to  the  said  Federal  Discount  Company  according  to 
the  terms  of  certain  agreements  made  and  executed  the  same  day  as 
said  salary,  wages  and  compensation  by  said 

were  sold;  and  I  hereby  certify  the  following  statements  to  be  true  in 
every  particular: 

That  my  name  is 
that  I  am  over  twenty-one  years  of  age  and  that  I  reside  at 

that  I  am  employed  by 
hereinafter  des- 
ignated as  Employer;  that  I  receive  for  said  employment 

Dollars  ($  )  per 

that  I  have  been  so  employed  for  a  period  of  years, 

and  in  consideration  of  the  premises,  I  have  and  do  hereby  sell  and 
transfer  to  the  said  Federal  Discount  Company,  its  legal  representatives 
and  assigns,  all  the  salary,  wages  and  earnings  now  due  and  to  become 
due  to  me  from  my  said  employer,  or  any  person,  corporation  or  firm, 
that  may  hereafter  employ  me  for  work,  labor  and  services,  now  ren- 
dered by  me,  now  being  rendered  by  me  and  to  be  rendered  by  me, 
for  my  said  present  or  subsequent  employer,  to  the  sum  and  amount 
of  Dollars  ($  ),  and  I  hereby  authorize  and  di- 

rect my  said  employer,  and  any  employer  with  whom  I  may  hereafter 
engage,  to  pay  the  same  as  it  accrues  to  the  said  Federal  Discount  Com- 
pany its  legal  representatives  and  assigns,  and  I  hereby  hold  harm- 
less my  said  employer  and  any  employer  with  whom  I  may  hereafter 
engage  by  reason  of  such  payments,  and  all  the  said  salary  or  sums 
of  money  are  hereby  set  aside  as  the  property  of  the  said  Federal  Dis- 
count Company,  its  legal  representatives  and  assigns,  for  its  and  their 
sole  use  and  benefit  forever. 


APPENDICES. 

2.  If  said  first  vendor  earns  said  moneys  sold  or  to  be  sold  by  him* 
and  the  same  are  turned  over  to  the  said  vendee  according  to  the  terms 
of  the  sale  and  agreements  entered  into  by  the  said  first  vendor,  and 
if  the  charges  provided  for  in  paragraph  3  of  this  instrument  are  paid, 
in  the  manner  and  at  the  time  or  times  therein  stated,  this  instrument 
is  to  be  void,  otherwise  to  remain  in  full  force  and  effect.    But  the  real- 
ization and  receipt  by  the  vendee,  the  said  Lenox  Discount  Company, 
of  sufficient  moneys,  under  and  by  virtue  of  the  sale  and  the  agreements- 
aforesaid,  and  the  charges  specified  in  paragraph  3,  shall  operate  as 
full  discharge  of  this  instrument. 

3.  It  is  further  agreed,  that  if  the  first  vendor  fails  to  earn  the 
said  moneys  sold  by  him,  or  fails  after  earning  the  same  to  pay  over 
said  moneys  collected  by  him,  on  the  day  agreed  upon  under  and  by 
virtue  of  the  agreements  entered  into,  then  the  said  vendee  the  Federal 
Discount  Company  its  legal  representatives  and  assigns,  shall  out  of 
any,  either  or  all  of  the  moneys  received  by  virtue  of  this  transfer,  pay 
itself  the  moneys  sold  and  transferred  by  the  said  first  vendor,  together 
with  any  reasonable  sum  which  the  said  vendee  has  expended  or  made1 
itself  liable  for,  by  reason  of  the  employment  of  an  attorney  to  collect, 
or  for  endeavoring  to  collect,  any  matter  or  thing  or  portion  thereof, 
hereinbefore  sold  and  transferred,  or  this  day  sold  and  transferred  or 
to  be  sold  and  transferred  by  the  said  first  vendor,  and  said  vendee  in- 
accepting  this  instrument  agrees  out  of  any  such  receipt  or  receipts  here- 
inbefore mentioned,  to  pay  such  sum  or  sums  to  itself  as  shall  be  due 
it,  under  said  sale  and  agreements  and  after  so  doing  to  pay  any  balance 
left  to  the  undersigned  within  a  reasonable  time  after  notice  and  de- 
mand given  personally. 

4.  And  for  the  same  considerations  aforesaid,  I  hereby  agree  and 
request,  that  at  the  option  of  the  said  vendee,  no  notice  in  any  manner 
of  the  failure  or  default  of  the  first  vendor  herein,  to  earn  said  moneys 
sold  and  transferred  to  the  vendee  by  the  first  vendor,  or  of  any  default 
of  the  said  first  vendor,  in  failing  to  turn  over  any  moneys,  or  of  any 
other  default  in  connection  with  the  sale  of  said  first  vendor's  salary 
to  the  said  vendee,  be  given  me  in  any  manner,  and  I  hereby  waive' 
notice  of  all  kinds  whatsoever,  and  I  further  consent  to  any  and  all 
extensions  of  time  which  the  vendee  may  give  the  first  vendor  to  earn 
the  salary  so  sold  by  him,  or  turn  over  the  same  after  it  has  been 
earned  and  collected  by  the  said  first  vendor,  it  being  understood  that 
such  extensions,  if  any,  are  given  at  my  request,  and  I  further  agree 
that  any  such  extensions  shall  not  affect  or  invalidate  this  instrument 
or  any  part  thereof. 

Signed  and  Sealed  this day  of 190    _ 

In  the  presence  of 

[L.  S.] 

STATE  OF  NEW  YORK,          }       . 
City  and  Count's/  of  New  York,  ]    v 

On  this  day  of  190      before  me  per- 

sonally appeared  to  me  known, 

and  known  to  me  to  be  the  person  described  in,  and  who  executed  the 
foregoing  instrument,  and  he  duly  acknowledged  to  me  that  he  executed 
the  same. 


Commissioner  of  Deeds,  City  of  New  York. 


APPENDIX  VII. 

Copy  of  Bill  of  Sale  used  by  the  Federal  Discount  Company. 
The  borrower  is  required  to  sign  this  document  before  the  money 
is  advanced: 

BILL    OF     SALE. 

TO  ALL  TO  WHOM  THESE  PRESENTS  SHALL  COME,     GREETING! 
KNOW  YE,  THAT  I,  Of 

for  valuable   consideration,   the   receipt   of 

which  I  do  hereby  acknowledge,  have  bargained  and  sold,  and  by  this 
instrument  do  bargain  and  sell  and  set  over  unto  the  Federal  Discount 
Company  its  legal  representatives  and  assigns,  absolutely  and  forever, 
all  wages,  salary  and  earnings  now  due  and  to  become  due,  up  to  the 
total  amount  of  Dollars  ($  )  from 

my  present  employer,  who  is 

of  which  said  wages,  salary 

and  earnings  are  due  and  payable  to  me  as  follows: 
Dollars  ($  )  on  of  each  and  every 

from  the  date  hereof,  for  work,  labor,  and  services  now  being  rendered 
and  to  be  rendered  for  my  said  employer  by  me;  and  I  do  also  bargain 
and  sell  unto  the  said  Federal  Discount  Company  all  my  salary,  wages 
and  earnings,  up  to  said  total  amount  of 

Dollars  ($  )  hereafter  becoming  due  and  payable  from  any  sub- 

sequent employer  by  whom  I  may  hereafter  be  employed;  together 
with  all  my  right  and  privilege  relative  to  the  salary,  wages  and  earn- 
ings bargained  and  sold  by  this  instrument;  the  said  Federal  Discount 
Company  to  have  and  to  hold  the  said  salary,  wages  and  earnings,  unto 
itself,  its  legal  representatives  and  assigns  forever.  I  hereby  direct 
my  said  employer 

or  any  subsequent  employer,  to  pay  my  said  salary,  wages  and  earnings, 
up  to  said  total  amount  of  Dollars 

($  )  to  the  said  Federal  Discount  Company  its  legal  representa- 

tives and  assigns,  as  the  same  becomes  due  and  earned.  I  expressly 
agree  that  if  said  salary,  wages  and  earnings  shall  not  be  earned  by 
me  that  this  transfer  shall  continue  in  full  force  until  said  total 
amount  of  Dollars  (?  ) 

shall  have  been  earned. 

Signed  and  Sealed  this day  of 190     . 

[L.  s.] 

In  the  presence  of: 


STATE  OF  NEW  YORK,  \       . 

City  and  County  of  New  York,  j    ' 

On  this  day  of  190    , 

before  me  personally  came 


APPENDICES.  IO7 

to  me  known  and  known  to  me  to  be  the  individual  described  in  and 
who  executed  the  foregoing  bill  of  sale,  and  duly  acknowledged  that  he 
executed  the  same. 


Commissioner  of  Deeds,  City  of  New  York. 

AFFIDAVIT. 
STATE  OF  NEW  YORK, 


City  and  County  of  New  York,  r  ss' ' 

being  duly  sworn,  de- 
poses and  says,  that  he  is  the  person  who  executed  the  foregoing  bill 
of  sale,  and  that  he  is  over  twenty-one  years  of  age,  and  has  full  right 
and  title  to,  and  that  there  is  no  lien  or  any  incumbrance  whatsoever 
upon  the  things  above  sold;  that  the  deponent  has  not  previously  sold 
or  incumbered  in  any  way  the  whole  or  any  part  of  the  said  things 
sold,  and  that  deponent's  arrangement  as  to  his  salary,  wages  and 
earnings  with  his  employer  contains  no  conditions  whatsoever  which 
would  prevent  any  purchaser  obtaining  the  full  benefit  thereof  as  his 
purchase;  that  no  offset  or  counterclaim  exists  against  the  things 
above  sold,  and  that  he  fully  understands  the  terms  of  all  the  instru- 
ments executed  in  the  sale  of  said  salary,  and  that  the  said  salary  is 
sold  absolutely. 

Signed  and  Sealed  this day  of 190 

[L.  s.] 


In  the  presence  of 

)  before  me    this 

day  of. 


Sworn  to  before  me    this 7 

,  190       J 


Commissioner  of  Deeds, 
City  of  New  York. 


APPENDIX  VIII. 

Copy  of  Bill  of  Sale  used  by  A.  W.  Connable : 
BILL  OF  SALE. 

NEW  YORK  CITY 190 

FOR  CASH  in  hand  paid  by  A.  W.  CONNABLE  to  myself,  I  do 
hereby  sell,  transfer  and  set  over  to  the  said  A.  W.  CONNABLE,  all 
of  my  right,  interest,  title  and  claim  in  and  to  all  wages,  salary  or 
commissions  becoming  due  and  payable  to  me  from 

for  the  half  month  ending  the day  of 190 

which  wages,  salary  or  commissions  becoming  due  and  payable  to  me, 

as  aforesaid,  I  do  promise  and  warrant  will  amount  to  the  sum  of  $ 

WITNESS  my  hand  and  seal  this  day  and  year  first  above  written. 

(SEAL) 


APPENDIX  IX. 

Copy  of  Assignment  filed  upon  the  employer  used  by  A.  W. 
Connable : 

TELEPHONE    3609    BEEKMAN. 

T.  W.  STAPLETON, 
116  NASSAU  ST.,  ROOM  601. 

NEW  YORK  CITY 190 .... 


GENTLEMEN  : 

You  and  each  of  you  are  hereby  notified  that  by  virtue  of  a  certain 
instrument  of  assignment  of  salary,  wages  or  commission  executed 

and  delivered  to  me  by 

all  of  his  salary,  wages  or  commission  now  due  or  to  become  due  from 
you  and  each  and  every  one  of  you,  and  now  in  your  hands,  or  which 
may  come  into  your  hands,  has  become  due  and  payable  to  me. 

A  duly  authenticated  copy  of  the  above  described  assignment  is  on 
the  other  side  of  this  notice.  You  are  requested  to  hold  all  moneys  now 
in  your  hands,  or  hereafter  coming  into  your  hands,  which  would 
otherwise  be  payable  to  the  assignor,  subject  to  my  order. 

You  are  further  notified  that  all  right  of  the  above  assignor  to  take, 
assign,  or  receipt  for  the  said  salary,  wages  or  commission  assigned 
and  transferred  to  me  as  above  noted,  or  any  part  thereof,  has  ceased, 
and  any  delivery  to  him  is  made  at  your  own  peril. 

When dollars  is  paid  over  on  the  account 

of  the  above  assignment,  and  the  same  is  received  ~by  the  Assignee,  he 
will,  providing  said  money  or  parts  thereof  has  been  paid  over  and 
received  promptly,  and  also  before  any  claim  arising  out  of  the  mat- 
ters above  noted  has  been  put  in  the  hands  of  an  attorney  or  collection 
agency  for  collection,  and  also  before  any  suit  has  been  commenced  upon 
the  same,  withdraw  this  notice  and  treat  the  same  as  though  it  had 
not  been  given.  This  offer,  if  acted  upon,  must  be  considered  a  moral,, 
not  legal  obligation,  and  revocable  without  notice  by  the  Assignee. 

Yours  truly, 


APPENDICES. 
NOTICE. 

Employers  disposed  to  question  the  rights  of  the  above  assignee 
under  the  above  assignment  will  avoid  unnecessary  trouble  and  expense 
by  making  a  brief  preliminary  examination  into  the  law  covering  the 
matters  involved. 

The  highest  Courts  of  New  York,  Massachusetts,  Pennsylvania 
Illinois  and  other  states  have  decided  that  every  employee  has  an 
absolute  right  to  assign  wages  which  he  has  earned  and  also  wages 
which  he  expects  to  earn,  and  that  the  employer,  in  such  cases,  is 
bound  to  pay  such  wages  as  they  accrue  to  the  assignee.  If  the  opinion 
of  counsel  is  desired,  his  work  will  be  facilitated  by  his  examining  the 
following  cases:  148  New  York,  592;  9  Paige  (New  York),  243;  5  New 
York  Superior  Court,  379;  6  New  York,  179;  44  Barb.  (New  York),  409; 
81  New  York,  454;  167  New  York,  452;  208  Illinois,  252;  68  Massachu- 
setts, 565;  91  Pennsylvania  State  Reports,  296;  39  Connecticut,  536; 
28  Vermont,  19;  51  New  Hampshire,  409.  In  a  standard  work,  i.  e., 
American  and  English  Encyclopedia  of  Law,  in  Volume  II,  Second 
Edition  of  page  1031,  the  law  of  this  country  is  stated  to  be  as  follows: 
"An  assignment  of  wages  to  be  earned  under  an  existing  employment, 
made  in  good  faith  and  for  a  valuable  consideration  is  valid.  And  if 
there  is  a  subsisting  engagement,  an  assignment  of  future  earnings 
will  be  sustained  although  the  assignor  is  liable  to  removal  at  any 
time," — and  in  support  of  this  statement  of  the  law,  the  decisions  of 
the  highest  Courts  of  nearly  all  the  states  of  this  country  are  cited. 

ASSIGNMENT. 

In  consideration  of  the  sum  of  one  dollar  paid  to  me,  receipt  whereof 
is  hereby  acknowledged,  I  hereby  sell,  assign,  transfer  and  set  over  to 

all  wages,  salary  or  commissions 

due  and  to  become  due  to  me  from 

within  a  period  of  one  year  from  the  date  hereof. 

DATED,  New  York  City,  the day  of 190. . . . 

.....[L.  s.] 


City  and  County  of  New  York,  ss.: 

being  duly  sworn,  says:     That  he  has 

examined  the  original  assignment  dated and  certifies 

that  the  within  instrument  is  a  true  copy  in  all  respects  of  the  said 
original. 


Sworn   to   before   me   this \ 

day  of   ,  19 j 


Commissioner  of  Deeds  for  New  York  City. 
(Seal) 


APPENDIX  X. 

Copy  of  Assignment  filed  upon  the  employer  used  by  H.  A. 
Courtright. 

ASSIGNMENT. 
THIS  INSTRUMENT  WITNESSETH 

THAT  I of 

for  good  and  valuable  consideration  to  me  rendered  by 

the  receipt  whereof  is  hereby  acknowledged,  have 

sold  and  by  these  presents  do  sell,  assign,  transfer  and  set  over  to 

all  of  my  salary  and  other 

compensation  now  due  and  to  become  due  to  the  amount  of  $ 

from  my  present  employer 

of and  which  sum  or  sums  of  money 

are  agreed  to  be  paid  to  me on 

day  of  each  and  every month  for  work,  labor 

and  services  by  me  now  being  performed  and  to  be  performed  for  the 
said  employer  aforesaid;  also  any  and  all  my  salary  or  compensation 
to  said  amount  to  become  due  from  any  employer  by  whom  I  may 
hereafter  be  employed;  together  with  all  the  rights  and  privileges 
relative  to  said  salary  or  compensation  assigned  that  I  myself  might 
or  would  have,  had  this  assignment  not  been  executed,  and  I  hereby 
authorize  and  direct  my  said  employer  as  said  services  are  performed, 
and  as  except  for  this  instrument  said  salary  would  become  due  and 

payable  to  me,  to  pay  the  same  to and  do  hereby 

hold  harmless  my  said  employer  by  reason  of  any,  either  and  all  of 
such  payments. 

Dated  this day  of 190 in  the 

City  of  Providence,  State  of  Rhode  Island. 

Witness Signed [SEAL] 

STATE   OF   NEW   YORK,  7 
County    of   Kings,     j 

Know  all  men  by  this  certificate  that  I,  Edgar  C.  Nowlin,  a  notary 
public  in  and  for  the  County  of  Kings,  have  carefully  compared  the 
above  copy  of  assignment  with  the  original  thereof,  at  the  time  of 
comparison  in  my  possession,  and  I  hereby  certify  that  the  above  copy 
is  a  true  and  correct  copy  of  said  original. 

Therefore  I  authenticate  said  copy. 


Notary  Public,  County  of  Kings. 


APPENDICES.  Ill 

H.  A.  COURTRIGHT, 

Room  539 
Banigan  Building, 
PROVIDENCE,  R.  I. 

190 

GENTLEMEN:  — 

You  and  each  of  you  are  hereby  notified  that 

has  heretofore  for  value  executed  and  delivered  to  me  the 

assignment,  a  copy  of  which  is  on  the  other 'Side  of  this  notice. 

Demand  is  hereby  made  that  you  pay  over  to  the  undersigned  any 
and  all  wages  which  have  accrued  or  which  may  hereafter  accrue  and 
any  and  all  money  now  in  your  hands  or  which  may  afterwards  come 
into  your  hands  to  the  amount  below  mentioned.  Notice  is  now  given 
you  that  the  authority  of  the  above  assignor  to  either  take,  sign  or 
receipt  for  the  above  wages  assigned  has  ceased  and  that  any  delivery 
of  or  payment  to  him  is  made  at  your  own  peril. 

When  $ is  paid  over  on  the  account  of  the  above 

assignment,  and  the  same  is  received  by  the  Assignee,  he  will,  providing 
said  money  or  parts  thereof  has  been  paid  over  and  received  promptly, 
and  also  before  any  claim  arising  out  of  the  matters  above  noted  has 
been  put  in  the  hands  of  an  attorney  or  collection  agency  for  collection, 
and  also  before  any  suit  has  been  commenced  upon  the  same,  withdraw 
this  notice  and  treat  the  same  as  though  it  had  not  been  given.  This 
offer  if  acted  upon,  must  be  considered  a  moral,  not  legal  obligation, 
and  revocable  without  notice  by  the  Assignee. 

Respectfully, 

NOTICE. 

Employers  disposed  to  question  the  rights  of  the  above  assignee 
under  the  above  assignment  will  avoid  unnecessary  trouble  and  ex- 
pense of  making  a  brief  preliminary  examination  into  the  law  cover- 
ing the  matters  involved. 

The  highest  Courts  of  Rhode  Island,  Massachusetts,  Pennsylvania, 
New  York  and  other  states  have  decided  that  every  employe  has  an 
absolute  right  to  assign  wages  which  he  has  earned  and  also  wages 
which  he  expects  to  earn,  and  that  the  employer,  in  such  cases,  is 
bound  to  pay  such  wages  as  they  accrue  to  the  assignee.  If  the  opin- 
ion of  counsel  is  desired,  his  work  will  be  facilitated  by  his  examining 
the  following  cases:  Tiernay  vs.  McGarity,  14  Rhode  Island,  231;  2 
Gray  (Massachusetts),  565;  91  Pennsylvania  State  Reports,  296;  148 
New  York,  592;  81  New  York,  454.  In  a  standard  work,  i.  e.,  Ameri- 
can and  English  Encyclopedia  of  Law,  in  Volume  II,  Second  Edition 
of  page  1031,  the  law  of  this  country  is  stated  to  be  as  follows:  "An 
assignment  of  wages  to  be  earned  under  an  existing  employment,  made 
in  good  faith  and  for  a  valuable  consideration  is  valid.  And  if  there- 
is  a  subsisting  engagement,  an  assignment  of  future  earnings  will  be 
sustained  although  the  assignor  is  liable  to  removal  at  any  time," — 
and  in  support  of  this  statement  of  the  law,  the  decisions  of  the  highest, 
courts  of  nearly  all  the  states  of  this  country  are  cited. 


APPENDIX  XL 

Copy  of  Notice  sent  to  the  employer  by  the   Federal  Dis- 
'count  Company: 

NOTICE. 
NEW    YORK  . . 


DEAR    SIR  : 

The  Federal  Discount  Company  does  herewith  file  with  you  a  duly 
authenticated  copy  of  an  assignment  of  salary,  wages  and  earnings, 

heretofore  delivered  to  said  Company  by 

one  of  your  employees. 

Notice  is  hereby  given  that  the  said  Federal  Discount  Company 

has  a  lien  to  the  extent  of  $ upon  the  salary,  wages  and 

earnings  now  due,  or  hereafter  to  become  due,  to,  or  to  be  earned  in 
the  future  by,  said  employee,  and  does  hereby  demand  that  you  pay 
to  said  Federal  Discount  Company,  at  its  office,  No.  12  Charles  Street, 
(Room  3),  Borough  of  Manhattan,  New  York  City,  all  such  salary  and 
wages  to  the  extent  of  $ whether  now  due,  or  hereafter  to  be- 
come due  to,  or  to  be  earned  in  the  future  by,  said  employee. 

If,  notwithstanding  this  notice,  you  should  pay  said  sum,  or  any 
part  thereof,  to  said  employee,  or  to  any  person  or  persons  other  than 
•said  Federal  Discount  Company,  you  nevertheless  will  continue  liable 
to  pay  the  same  to  said  Company,  and  in  that  event  legal  proceedings 
will  be  instituted  against  you  to  compel  such  payment  to  said  Federal 
Discount  Company.  Your  own  protection,  therefore,  requires  that 
said  money  should  promptly  be  paid  to  said  Federal  Discount  Com- 
pany. 

Said  Federal  Discount  Company  does  hereby  certify  that  annexed 
hereto  is  a  true  and  correct  copy  of  the  said  assignment,  and  of  the 
whole  thereof,  and  of  the  acknowledgment  thereof  by  said  employee, 
thereunto  appended,  and  of  the  whole  thereof. 

The  Law  regarding  the  Purchase  and  Sale  of  Wages  is  too  well  set- 
tled to  merit  discussion.  The  Bill  of  Sale  speaks  for  itself.  The  law 
is  clearly  stated  in  the  following  extract  from  the  American  Encyco- 
pedia  of  Law,  Volume  1,  of  the  First  Edition,  at  page  828. 

"A  sale  of  wages  or  salary  to  be  earned  under  an  existing  employment  made 
in  good  faith  and  for  a  valuable  consideration  is  valid.  It  is  immaterial  that 
the  seller  works  from  day  to  day  and  is  hired  for  no  specified  time ;  or  that 
he  is  removable  at  any  time.  A  sale  of  wages  by  workmen  under  subsisting 
engagement  will  extend  to  wages  earned  under  a  renewal  of  this  agreement  at 
a  different  rate  of  wages."  (See  also  cases  cited  thereunder  on  tho  same  page.) 

Likewise  in  the  Cyclopedia  of  Law  and  Procedure,  Volume  4,  page 
18,  it  is  held, 

"Future  earnings  or  salary  of  a  private  individual  may  be  sold  although  the 
contract  under  which  the  work  is  being  done  be  indefinite  as  to  time  of  employ- 
ment and  amount  to  be  paid  for  the  work."  (See  also  the  numerous  decisions 
-cited  thereunder.) 

FEDERAL    DISCOUNT    COMPANY, 

By  Manager, 

12  Charles   Street    (Room   3), 

Borough  of  Manhattan, 

City  of  New  York. 


APPENDIX  XII. 
Copy  of  Protest  sent  to  borrower  from  H.  A.  Courtright: 

UNITED    STATES    OF    AMERICA. 
STATE  OF  RHODE  ISLAND  AND  PROVIDENCE   PLANTATIONS. 

On  the  4th  day  of  November  in  the  year  of  our  Lord  one  thousand 
nine  hundred  and  seven,  at  the  request  of  H.  A.  Courtwright  in  the 
City  of  Providence,  County  of  Providence  and  State  aforesaid,  I 
John  S.  Clayton,  a  Notary  Public  for  the  City  and  State  aforeaid,  duly 
appointed,  commissioned  and  sworn,  dwelling  and  practising  in  the 
City  of  Providence,  in  said  County  of  Providence,  exhibited  the  orig- 
inal note  which  is  hereunto  attached  to 

who  refused  to  pay  the  same. 

WHEEEUPON  I,  the  said  Notary  Public,  at  the  request  aforesaid, 
have  Protested  and  by  these  Presents  do  solemnly  PEOTEST  against  the 
maker  and  the  endorser  of  said  note  and  all  others  concerned,  for  all 
Exchange,  Re-Exchange,  Costs,  Damages,  and  Interests,  already  sus- 
tained, or  which  may  be  sustained  for  want  of  payment  of  the  said 
note. 

Thus  done  and  Protested  under  my  Hand  and  Seal 
at  539  Banigan  Bldg.  the  day  and  year  above 
written. 

Fee,  $ 
[SEAL.] 


APPENDIX  XIII. 

Copy  of  Note  used  by  H.  A.  Courtright : 

PROVIDENCE,  R.  1 190. . . 

$3.00. 

On 190. . .  I  promise  to  pay  to  the  order  of  H.  A.  Court- 
right,  at  Room  539  Banigan  Building,  Providence,  Rhode  Island,  Three 
Dollars.  Interest  from  and  after  date  of  maturity  two  per  cent,  per 
month  or  fraction  of  a  month. 

In  case  this  note  is  not  paid  at  maturity,  I  agree  to  pay  a  collection 
fee  of  $ in  addition  to  principal  and  interest. 

This  note  is  one  of  a  series  dated  this  day  and  signed  by  me,  and  I 
agree  that  if  this,  or  any*  one  of  said  series,  is  not  paid  by  me  on  the 
date  when  due,  that  each  and  every  one  of  said  notes  become  forthwith 
due  and  payable  on  said  date  of  first  default,  but  it  shall  be  optional 
with  the  holder  hereof  to  make  no  demand  for  payment  until  the  date 
herein  first  mentioned  when  this  note  would  be  due  in  any  event. 

Signed 

Atty.  in  Fact. 


APPENDIX  XIV. 

The  following  memorandum  was  received  from  Providence, 
R.  L,  by  an  employee,  who  secured  a  loan  from  one  of  the  brokers 
of  H.  A.  Courtright: 

MEMORANDUM. 

PRIVATE  BANKING  HOUSE 

OF 

H.  A.  COURTRIGHT, 

Established  1897, 

Room  539,  E 

PROVIDENCE,  R.  I.,..  ....."._.  1 190 


SlH :  I  have  this  day  purchased  the  following 
notes,  of  which  you  appear  to  be  the, maker: 

Note  for 


Each  of  these  notes  is  payable  at  my  office,  539 
Banigan  Building,  Providence,  Rhode  Island. 

All  payments  must  be  made  at  said  address  on 
the  date  when  notes  are  due.  If  not  they  will  be 
protested  and  put  into  the  hands  of  a  collection 
agency  or  attorney  for  collection,  aijd  the  maker  will 
have  to  pay  protest  and  collection  charges  besides 
the  interest  from  maturity.  Checks  of  private  indi- 
viduals not  accepted.  Checks,  drafts  or  orders  sent 
by  mail  will  be  sent  at  sender's  risk.  Remittances 
from  out  of  town  should  be  mailed  at  least  one  day 
before  note  is  due. 

(OVER) 


APPENDICES.  115 

APPENDIX   XV. 
Maryland  law  of  1906  concerning  the  assignment  of  wages: 


AN  ACT  to  amend  Article  8  of  the  Code  of  Public  General  Laws,  title 
"Assignment  of  Choses  in  Action,"  by  adding  thereto  certain  Sec- 
tions, to  follow  Section  10  of  said  Article,  and  to  be  known  as  Sec- 
tions 11,  12,  13,  14,  15,  16,  17  and  18. 

Section  1.  Be  it  enacted  ~by  the  General  Assembly  of  Maryland, 
That  Article  8  of  the  Code  of  Public  General  Laws,  title  "Assignment 
of  Choses  in  Action,"  be  and  the  same  is  hereby  amended  by  adding 
thereto  certain  sections,  to  follow  Section  10  of  said  Article,  to  be 
known  as  Sections  11,  12,  13,  14,  15,  16,  17  and  18,  and  to  read  as 
follows : 

Section  11.  No  assignment  of  wages  or  salary  shall  be  valid  so 
as  to  vest  in  the  assignee  any  beneficial  interest,  either  at  law  or  in 
equity,  unless  such  assignment  be  in  writing  signed  by  the  assignor 
and  acknowledged  in  person  by  him  or  her  before  a  Justice  of  the 
Peace  in  and  for  the  city  or  county,  as  the  case  may  be,  in  which  the 
assignor  resides,  and  entered  on  the  same  day  by  said  Justice  of  the 
Peace  upon  his  docket;  and  unless  further,  within  three  days  from  the 
execution  and  acknowledgment  of  said  assignment  a  true  and  complete 
copy  thereof,  together  with  the  certificates  of  its  acknowledgment,  be 
served  upon  the  person,  firm  or  corporation  by  whom  said  wages  or 
salary  are  due  or  to  become  due,  in  the  same  manner  that  the  sum- 
mons in  chancery  is  now  required  by  law  to  be  served;  provided, 
however,  that  no  assignment  of  wages  or  salary  by  a  married  person 
shall  be  valid  unless  the  same  is  also  executed  and  acknowledged  as 
above  by  the  assignor's  wife  or  husband,  as  the  case  may  be. 

Section  12.  That  proof  of  said  service,  as  provided  for  in  the  pre- 
ceding section,  shall  be  by  an  admission  thereof  in  writing  by  the 
person,  firm  or  corporation,  his,  their  or  its  agent  on  the  original  as- 
signment, which  admission  of  service  shall  also  be  entered  by  said 
Justice  of  the  Peace  upon  his  docket  within  two  days  thereafter. 

Section  13.  That  in  addition  to  said  acknowledgment  to  be  made 
by  said  assignor,  he  or  she,  as  the  case  may  be,  shall  make  affidavit 
that  he  or  she  has  not  paid,  and  will  not,  directly  or  indirectly,  pay 
more  than  the  legal  rate  of  six  per  centum  per  annum  on  any  sum 
borrowed,  or  permit  a  deduction  from  said  sum  so  loaned  to  him  or 
her,  at  the  time  of  said  loan,  or  any  time  thereafter,  of  more  than  a 
sum  equivalent  to  six  per  centum  per  annum  for  the  time  said  loan 
is  made. 

Section  14.  The  term  "assignment,"  as  used  in  this  Act,  shall  in- 
clude every  assignment,  transfer,  sale,  pledge,  mortgage  or  hypotheca- 
tion, however  made  or  attempted,  of  the  wages  or  salary  of  any  per- 
son, or  of  any  interest  therein. 

Section  15.  Whenever  an  assignment  of  the  wages  or  salary  of 
any  person  or  persons  shall  be  given  as  security  for  a  loan  tainted 
with  usury,  or  shall  be  given  to  secure  the  payment  or  fulfillment  of 
a  usurious  contract  or  the  payment  of  the  principal  or  interest  of  a 
usurious  debt,  such  assignment  shall  be  absolutely  void. 


Il6  SALARY  LOAN  BUSINESS  IN  NEW  YORK  CITY. 

Section  16.  Every  assignment  of  wages  to  be  earned  in  whole  or 
in  part  more  than  six  (6)  months  from  and  after  the  making  of  such 
assignment,  shall  be  absolutely  void. 

Section  17.  Whenever  any  person,  firm  or  corporation  shall  bring, 
or  threaten  to  bring  any  action  or  suit  to  enforce  any  assignment  of 
wages  or  salary  which  has  not  been  duly  executed,  acknowledged, 
sworn  to  and  served  upon  the  employer  in  conformity  with  the  pro- 
visions of  this  Act,  or  which  is  declared  invalid  by  the  provisions  of 
this  Act,  courts  of  equity  shall  have  full  power,  upon  the  application 
either  of  the  assignor  of  such  wages  or  salary,  or  of  the  person,  firm 
or  corporation  from  whom  such  wages  or  salary  is,  or  is  to  become 
due,  to  perpetually  enjoin  the  threatened  or  attempted  enforcement 
of  any  such  assignment;  and  the  fact  that  the  complainant  has  a  com- 
plete and  adequate  remedy  at  law,  shall  constitute  no  defense  to  the 
maintenance  of  a  suit  in  equity  for  the  purpose  aforesaid. 

Section  18.  The  invalidity  of  any  portion  of  this  Act  shall  not 
affect  the  validity  of  any  other  portion  thereof  which  can  be  given 
effect  without  such  invalid  part. 


APPENDIX  XVI. 

Copy  of  the  law  of  Virginia,  approved  March  12,  1906.  It 
is  typical  of  the  laws  in  those  states  which  include  the  regulation 
of  loans  secured  by  an  assignment  of  wages  with  loans  secured  by 
a  chattel  mortgage. 

'BE  IT  ENACTED  BY  THE  GENEEAL  ASSEMBLY  OF  VIBGINIA,  THAT  no* 
person,  firm  or  corporation  shall  engage  generally,  regularly  or  col- 
laterally to  any  other  business,  in  the  business  of  making  of  loans 
on  household  or  kitchen  furniture,  or  household  goods,  or  wearing 
apparel,  or  sewing  machines,  or  musical  instruments,  or  wages,  or 
salaries,  or  on  conditional  sale  of  same,  without  first  obtaining  a 
license  thereof,  which  shall  be  in  addition  to  the  license  required  by 
law  for  any  other  business  the  person,  firm,  or  corporation  may  en- 
gage in.  The  applicant  for  such  license  shall,  before  the  same  is 
issued,  file  with  the  officer  authorized  to  issue  a  statement  or  oath 
giving  the  location  where  such  business  is  to  be  conducted,  the  name 
and  business  address  of  the  applicant,  if  the  licensee  is  an  individual, 
the  name  and  business  address  of  each  of  the  partners,  if  the  business 
is  a  firm,  and  the  name  and  business  address  of  each  of  its  officers, 
if  the  licensee  is  a  corporation,  and,  in  case  of  a  corporation,  the 
State  under  the  laws  of  which  it  is  organized.  Said  license,  when 
issued,  shall  not  be  transferable.  Should  the  licensee  change  the 
location  of  his  business  said  license  shall  immediately  become  void, 
unless  said  licensee  shall,  at  least  ten  days  before  changing  the 
location,  file  with  the  officer  authorized  to  issue  said  license  a  notice 
of  the  proposed  change  of  location  and  said  officer  shall  endorse 
on  said  license  the  fact  of  said  change.  In  default  of  compliance 
with  these  provisions,  said  license  shall  be  null  and  void.  The 
license  shall  at  all  times  be  kept  publicly  exposed  by  the  licensee 
on  his  business  premises.  Any  person,  firm  or  corporation  violating 
the  provisions  of  this  section  shall  pay  a  fine  of  not  less  than  $50 
and  not  more  than  $500  for  each  offence. 

2.  No  license  shall  be  issued  to  any  person,  firm  or  corporation 
to  carry  on  business  as  specified  in  section  1  of  this  act,  until  the 
applicant  shall  have  filed  with  the  clerk  of  the  circuit  court  of  the 
county,  or  of  the  corporation  court  of  the  corporation,  wherein  said 
business  is  to  be  conducted,  a  bond,  with  security  to  be  approved  by 
the  said  courts  or  judges  thereof  in  vacation,  in  the  penalty  of  one 
thousand  dollars,  payable  to  the  commonwealth  of  Virginia,  and  con- 
ditioned for  the  faithful  performance  by  the  licensee  of  the  duties 
and  obligations  pertaining  to  the  business  so  licensed,  and  the  prompt 


Il8  SALARY  LOAN  BUSINESS  IN  NEW  YORK  CITY. 

payment  of  any  judgment  which  may  be  recovered  against  said  li- 
censee on  account  of  damages  or  other  claims  arising  directly  or  col- 
laterally from  any  loan  of  money  or  sale  of  wages  or  salary. 

3.  Should   any   surety   on   such   bond   become   insolvent,   the    said 
judge  shall  immediately  require  the  licensee  to  file  an  additional  bond 
with  good  security,  and  on  failure  to  file  such  additional  bond  within 
ten  days  after  being  so  required  to  file  the  same,  said  licensee  shall 
stand  ipso  facto  revoked. 

4.  If  it  be  agreed  by  the  borrower  and  the  lender  at  the  time 
the  loan  is  made  the  lender  may  charge  for  investigating  the  security 
and  title  and   closing  the  loan,  a  fee  of  not  more  than  fifty  cents 
where  the  amount  borrowed   is  five  dollars  or  less;    not  more  than 
seventy-five  cents  where  the  amount  is  more  than  five  dollars  and  not 
more   than   ten    dollars;    and   not   more   than   one   dollar   where   the 
amount  borrowed  is  more  than  ten  dollars,  and  not  more  than  twenty 
dollars;    and   not   more   than   one    dollar   and   fifty   cents   where   the 
amount  borrowed   is  more   than   twenty   dollars   and  not   more  than 
thirty-five  dollars  and  not  more  than  two  dollars  where  the  amount  bor- 
rowed is  more  than  thirty-five  dollars,  which  said  fee  may  be  charged  if 
so  agreed,  upon  each  original  loan,  or  any  renewal  thereof:   provided, 
however,  that  no  fee  whatever  shall  be  allowed  on  any  renewal  or  exten- 
sion, which  occurs  within  sixty  days  from  the  time  of  making  the  loan  or 
from  the  time  of  the  last  renewal;  and  provided,  further,  that  the  fee 
provided   for   in   this   section   shall   not   be   charged   on   any  renewal 
made  after  the  expiration  of  four  months  from  the  date  of  the  original 
loan,  but  that  all  renewals  made  after  said  four  months  shall  be  as 
fees  not  greater  than  one-half  of  the  amounts  herein  provided:   and 
provided,  further,  that  any  loan  which  shall  be  made  between  said 
parties  within  ten  days  after  the  payment  of  a  pre-existing  loan  of 
approximately  the  same  amount,  shall  in  all  cases  be  construed  prima 
facie  to  be  a  renewal  of  said  pre-existing  loan.     No  original  loan  shall 
be  split  up  into  smaller  loans  in  order  to  increase  the  fees  allowed; 
but  if  two  or  more  loans  be  made  at  or  about  the  same  time  between 
the  same  parties,  they  shall  be  construed  to  be  but  one  original  loan, 
unless  the  contrary  plainly  and  unequivocally  appears. 

5.  Any  interest  charged  by  the  lender  to  the  borrower  in  excess 
of  the  present  legal  rate  of  interest,  or  any  fee,  fine  or  charge  what- 
soever   charged    by    the    lender    against    the    borrower,    whether    for 
negotiating   a   loan   or   for    commission,    examinations,   attorney's    fee 
or  any  other  bonus,  or  additional  charge  whatsoever,  to  those  allowed 
in  section  four  of  this  act,  shall  be  considered  as  a  payment  on  the 
principal  of  said  loan,  and  the  same  shall  be  credited  with  the  amount 
of  said   additional   charge   or  excess,  and   the  license  of  the   person, 
firm  or  corporation  making  such  additional  or  excessive  charge  may, 
in  the   discretion  of  the   circuit  court  of  the   county  or  corporation 
court    of    the    corporation    wherein    such    business    was    licensed,    be 
revoked. 

6.  It  shall  be  unlawful  for  any  licensee  under  this  act  to  charge 
any  sum  of  money  for  fire  insurance  on  any  article  of  personal  prop- 
erty pledged  as  security  for  any    loan    or    any  fee  for  recording  any 
papers  connected  with  any  loan  or  sale,  under  the  terms  of  this  act 
except  such  as  are  actually  paid  by  such  licensee. 


APPENDICES.  119 

7.  If  any  person,  firm  or  corporation  shall  engage  generally,  regu- 
larly or  collaterally  to  some  other  business  in  the  business  of  making 
loans  or  purchasing  wages  or  salaries,  as  prescribed  in  section  one  of 
this  act,  without  first  obtaining  a  license  for  carrying  on  such  business 
in  the  city,  town  or  county,  in  which  said  business  is  transacted,  or 
shall  continue  to  conduct  said  business  after  the  forfeiture  or  cancel- 
lation of  the  license  under  which  the  same  is  conducted,  then  no  suit 
or  action  shall  be  maintained  for  the  enforcement  of  any  such  loan,  or 
any  security  given  for  such  loan,  or  any  assignment  of  wages  or  salary. 

8.  Every  individual,  firm  or  corporation  desiring  the  privilege  of 
conducting  business  under  the  provision  of  this  act,  shall  pay  therefor 
a  license  tax  of  One  Hundred  Dollars. 

9.  This  act  shall  not  apply  to  any  loan  in  excess  of  $150  actually 
and  bona  fide  made  at  any  one  time,  and  shall  not  prevent  any  mer- 
chant or  any  other  person  who  sells  provisions,  wearing  apparel,  house- 
hold goods  or  furniture  to  wage-earners  from  taking  as  security  there- 
for an  order  for  or  assignment  of  wages:   provided,  however,  that  no 
interest,  bonus  or  rebate  is  charged  or  taken,  directly  or  indirectly, 
upon  the  sale  or  amount  of  the  debt  contracted  or  from  the  amount  of 
wages,  and  that  the  property  is  sold  at  no  higher  price  than  like  prop- 
erty is  sold  on  credit  to  other  persons  than  such  wage-earners. 

10.  All  acts  and  parts  of  acts  in  conflict  with  any  of  the  provisions 
of  this  act  are  hereby  repealed. 


APPENDIX  XVII. 

New  York  law  of  1904,  Section  77: 

SECTION  1.  Any  person  or  persons,  firm,  corporation  or  company,  who 
shall  after  the  passage  of  this  act  make  to  any  employee  an  advance  of 
money,  or  loan,  on  account  of  salary  or  wage  due  or  to  be  earned  in 
the  future  by  such  individual  upon  an  assignment  or  note  covering 
such  loans  or  advances,  shall  not  acquire  any  right  to  collect  or  attach 
the  same  while  in  the  possession  or  control  of  the  employer,  unless 
within  a  period  of  three  days  after  the  execution  of  such  assignment  or 
notes  and  the  making  of  such  loan  or  loans,  the  party  making  such 
loans  and  taking  such  assignment  shall  have  filed  with  the  employer 
or  employers  of  the  individual  so  assigning  his  present  or  prospective 
salary  or  wages,  a  duly  authenticated  copy  of  such  agreement  or  assign- 
ment or  notes  under  which  the  claim  is  made. 

§  2.  No  action  shall  be  maintained  in  any  of  the  courts  of  this  state, 
brought  by  the  holder  of  any  such  contract,  assignment  or  notes,  given 
by  an  employee  for  moneys  loaned  on  account  of  salary  or  wages,  in 
which  it  is  sought  to  charge  in  any  manner  the  employer  or  employers, 
unless  it  shall  appear  to  the  satisfaction  of  the  court  that  a  copy  of 
such  agreement,  assignment  or  notes,  together  with  the  notice  of  the 
lien,  was  duly  filed  with  the  employer  or  employers  of  the  person 
making  such  agreement,  assignment  or  notes,  by  the  person  or  persons, 
corporation  or  company  making  such  loans  within  three  days  after 
the  said  loan  was  made  and  the  said  agreement,  assignment  or  notes 
were  given. 

§  3.     This  act  shall  take  effect  immediately. 


APPENDIX    XVIII. 
Massachusetts  law  of  1906: 

AN  ACT  RELATIVE  TO  THE  ASSIGNMENT  OF  WAGES. 

Be  it  enacted,  etc.,  as  follows: 

SECTION  I. — No  assignment  of  future  wages  shall  be  valid  for  a 
period  exceeding  two  years  from  the  date  thereof,  nor  unless  made 
to  secure  a  debt  contracted  prior  to  or  simultaneously  with  the  exe- 
cution of  said  assignment,  nor  unless  executed  in  writing  in  the  stan- 
dard form  herein  set  forth  and  signed  by  the  assignor  in  person  and 
not  by  attorney,  nor  unless  such  assignment  states  the  date  of  its  exe- 


APPENDICES.  121 

cution,  the  money  or  the  money  value  of  goods  actually  furnished  by 
the  assignee  and  the  rate  of  interest,  if  any,  to  be  paid  thereon. 

SECTION  II. — No  such  assignment  shall  be  valid  unless  a  copy 
thereof  is  delivered  to  the  assignor  by  the  assignee  at  the  date  of  the 
execution  of  such  assignment.  No  such  assignment  shall  be  binding 
on  the  employer  of  the  assignor  until  a  copy  of  the  assignment  and  an 
account,  which  shall  conform  to  the  requirements  hereinafter  stated, 
have  been  delivered  to  said  employer.  Said  account  shall  be  in  writ- 
ing and  shall  contain  a  statement  of  the  balance  due  and  of  the  sums 
of  money  received  by  the  assignee,  together  with  the  date  of  every 
such  payment  and  a  statement  as  to  whether  such  payment  is  interest, 
a  payment  on  the  principal,  or,  in  case  of  a  loan,  a  payment  on  the 
charge  for  making  and  securing  the  loan. 

SECTION  III. — The  term  "assignment,"  as  used  in  this  act,  shall  in- 
clude every  instrument  purporting  to  transfer  an  interest  in  or  an 
authority  to  collect  the  future  wages  of  a  person. 

SECTION  IV. — Said  standard  form  of  assignment  shall  be  as  fol- 
lows: 

KNOW  ALL  MEN  BY   THESE   PRESENTS. 

That    I of 

in  the  county  of ,  for  a  valuable  consideration,  to 

me  paid  by of , , 

the  receipt  whereof  I  do  hereby  acknowledge,  do  hereby  assign  and 
transfer  to  said all  claims  and  de- 
mands (which  I  now  have,  and  all)  which  within  a  period  of 

,  from  the  date  hereof  I   may   and   shall  have 

against  my  present  employer,  and  against  any  person  whose  employ 
I  shall  hereafter  enter,  (for  all  sums  of  money  due  and)  for  all  sums 
of  money  and  demands  which,  at  any  time  within  said  period  may 

and  shall  become  due  to  me,  for  services  as 

To  have  and  to  hold  the  same  to  the  said , 

his  executors,  administrators  and  assigns,  to  secure  a  debt. 

(1)  Of dollars   (with  interest  thereon  from 

at  the  rate  of per  cent  per  annum) ,  for  money  (or 

goods) ,  actually  furnished  by  the  assignee  amounting  to 

dollars. 

(2)  Contracted  prior  to  the  execution  of  this  assignment. 

(or  contracted  simultaneously  with  the  execution  of  this  assign- 
ment.) 

IN  WITNESS  WHEEEOF,  I  have  set  my  hand  this day 

of  

Signed  and  delivered,  in  presence  of 

h m M.  Received  and 

entered  in  records  of  assignment  of  wages  in  the  clerk's  office  of  the 

of ,  book  ,. 

page 


Clerk. 

SECTION  V. — An  assignment  of  wages  made  in  accordance  with  the 
provisions  of  this  act  shall  bind  all  wages  earned  by  the  assignor  with- 
in the  period  named  in  such  assignment. 

SECTION  VI. — All  acts  and  parts  of  acts  inconsistent  herewith  are 
hereby  repealed. 


APPENDIX  XIX. 

List  of  the  principal  salary  loan  offices  in  New  York  City  with 
their  addresses: 

Brown,  Albert,  170  Fifth  Avenue. 
Buell  &  Company,  106  Fulton  Street. 
Oarr  &  Company,  116  Nassau  Street. 
Chesterkirk,  R.  C.,  203  Broadway. 

29  West  42nd  Street. 
Elwood,  H.,(a)   206-208  Broadway. 
Graham,  Walter,  150  Nassau  Street. 
Harper  Realty  Co.,  116  Nassau  Street. 
Heron  &  Co.,  99  Nassau  Street. 
Howard,  C.  A.,   (b)   73  West  Eleventh  Street. 
Lenox  Discount  Co.,  39  Union  Square. 
Mason  Financial  Co.,  116  Nassau  Street. 
Moore  &  Co.,  299  Broadway. 
Mullin,  J.  G.,  150  Nassau  Street. 
New  Jersey  Finance  Co.,  99  Nassau  Street. 
Piermont  Finance  Co.,  116  West  39th  Street. 
Patterson  &  Co.,  150  Nassau  Street. 

32  Union  Square. 

"  40  Court  Street,  Brooklyn. 

Smith,  L.  G.,  71-73  Nassau  Street. 
Standard  Credit  Co.,  299  Broadway. 
Tolman,  D.  H.,  106  Fulton  Street. 

31  West  42nd  Street. 

373  Fulton  Street,  Brooklyn. 
Weber,  Daniel,  110  West  34th  Street. 
Wells  &  Co.,  95  Nassau  Street. 


(a)  This  office  was  opened  about  April  1,  1908. 

(b)  The  business  of  this  office  was  purchased  April  15,  1908,  by  Burt  Bros., 
who  have  opened  an  office  at  78  Fifth  Ave. 


APPENDIX  XX. 

A  bill  drafted  by  Dr.  Samuel  McCune  Lindsay,  Professor 
of  Social  Legislation,  Columbia  University,  and  Mr.  Frank 
Tucker,  Vice-president  of  the  Provident  Loan  Society,  New 
York  City: 

An  Act  to  amend  the  banking  law,  to  provide  for  the  supervision 
and  regulation  of  the  business  of  making  loans  on  pledges  of  personal 
property,  chattel  mortgages  or  assignment  of  salary  or  wages,  by  the 
banking  department  under  the  direction  of  the  Superintendent  of 
Banks  of  the  State  of  New  York,  and  under  the  immediate  direction 
of  a  deputy,  clerks  and  examiners,  to  authorize  the  appointment  of 
the  same  by  the  Superintendent  of  Banks  and  to  fix  their  compensa- 
tion and  to  defray  the  expenses  thereof. 

The  People  of  the  State  of  New  York,  represented  in  Senate  and  As- 
sembly, do  enact  as  follows : 

Chapter  689  of  the  Laws  of  1892,  entitled  "An  Act  in  relation  to 
banking  corporations,"  is  hereby  amended  by  adding  the  following 
section,  to  be  known  as  Section  : 

Paragraph  1.  Every  person,  firm  or  corporation  engaged  in  or 
seeking  to  engage  in  the  business  of  loaning  money  on  the  security  of 
personal  property  deposited  with  the  lender,  a  transaction  commonly 
known  as  pawnbroking;  or  upon  personal  property  remaining  in  the 
possession  and  use  of  the  borrower,  a  transaction  commonly  known  as 
a  chattel  mortgage;  or  upon  the  security  of  an  assignment  of  salary 
or  wages  either  earned  or  to  be  earned,  a  transaction  commonly  known 
as  salary  loan,  shall  on  or  before  the  first  day  of  July  next  ensuing 
the  passage  of  this  act,  file  with  the  Superintendent  of  Banks  in  such 
manner  and  in  such  form  as  he  may  direct,  a  certificate  stating  the 
name  and  residence  of  the  individual;  or  in  the  case  of  a  firm,  the 
names  and  residences  of  the  partners;  or  in  the  case  of  a  corporation, 
the  names  and  residences  of  the  officers  and  directors,  managers  or 
trustees  of  such  corporation;  and  the  place  or  places  where  said  busi- 
ness is  transacted  by  such  individual,  firm  or  corporation.  The  cer- 
tificate shall  state  the  amount  of  capital  paid  up  and  employed  at  the 
date  of  making  such  certificate  and  all  other  funds  used  as  loanable 
capital  in  said  business  and  obtained  in  any  other  manner  than 
through  capital  contribution.  The  certificate  shall  state  the  amount 
of  loans  outstanding  at  the  close  of  business  on  the  last  day  of  the 
month  preceding  the  date  of  the  certificate.  The  certificate  shall  give 


124  SALARY  LOAN  BUSINESS  IN   NEW  YORK   CITY, 

a  full  schedule  of  the  rates  of  interest  charged  for  all  loans,  together 
with  a  full  statement  of  each  and  every  charge  other  than  interest  in 
connection  with  the  making  of  such  loan. 

The  certificate  when  received  by  the  Superintendent  of  Banks  and 
receipt  acknowledged  by  him  in  writing  to  the  person,  firm  or  cor- 
poration engaged  in  the  business  set  out  in  paragraph  one  of  this  sec- 
tion, shall  constitute  a  license  to  carry  on  said  business  until  the  same 
is  revoked  by  the  Superintendent  of  Banks.  After  July  the  first  next  en- 
suing the  passage  of  this  act  it  shall  be  unlawful  to  engage  in  the 
business  of  loaning  money  in  the  manner  set  out  in  this  act  without 
a  license  from  the  Superintendent  of  Banks. 

It  shall  be  a  violation  of  this  act  for  any  person,  firm  or  corporation 
licensed  by  the  Superintendent  of  Banks  to  engage  in  the  business 
of  loaning  money  in  the  manner  set  out  in  paragraph  one  of  this  sec- 
tion, to  engage  in  or  have  a  financial  or  other  interest  in  any  other 
business  on  the  same  premises. 

Paragraph  2.  The  Superintendent  of  Banks  shall  inspect  or  cause  to 
be  inspected  from  time  to  time  and  as  frequently  as  may  be  practicable, 
the  books,  accounts  and  records  of  all  persons,  firms  or  corporations 
engaged  in  the  business  set  out  in  paragraph  one  of  this  section,  and 
shall  prescribe  the  forms,  books  and  records  of  all  transactions  in 
said  business  and  shall  require  periodic  and  annual  reports  to  be  made 
to  him  upon  such  matters  in  connection  with  said  business  as  may 
in  his  judgment  be  of  public  concern. 

Paragraph  3.  The  Superintendent  of  Banks  shall  have  the  power 
to  determine  what  is  a  reasonable  rate  of  interest  to  be  charged  by 
any  person,  firm  or  corporation  upon  loans  of  the  kind  described  in 
paragraph  one  of  this  section,  and  when  he  shall  have  determined 
what  is  a  reasonable  rate  of  interest  that  rate  shall  be  the  maximum 
legal  rate  which  may  be  charged  by  any  person,  firm  or  corporation 
upon  loans  of  the  kind  described  in  paragraph  one  of  this  section. 
After  July  the  first  next  ensuing  the  passage  of  this  act,  it  shall  be  a 
violation  of  this  act  to  make  any  charge  other  than  the  interest  rate 
fixed  by  the  Superintendent  of  Banks  for  any  service  connected  with 
the  making  of  loans  of  the  kind  set  out  in  paragraph  one  of  this 
section. 

Paragraph  4.  The  Superintendent  of  Banks  may  cancel  the  certifi- 
cate filed  with  the  banking  department  and  revoke  the  license  of  any 
person,  firm  or  corporation  refusing  to  furnish  the  information  re- 
quested by  him,  or  failing  to  report  as  he  may  require,  or  otherwise 
not  conforming  to  the  provisions  of  this  act  and  such  rules  and  regula- 
tions as  he  may  prescribe  under  this  act  for  the  business  of  making 
loans  upon  the  kinds  of  security  specified  in  paragraph  one  of  this 
section. 

Every  person,  firm  or  corporation  which  shall  on  and  after  the 
first  day  of  July  next  ensuing  the  passage  of  this  act,  engage  in  the 
business  of  loaning  money  upon  the  security  and  in  the  manner  speci- 
fied in  paragraph  one  of  this  section  without  first  obtaining  a  license 
to  engage  in  such  business  from  the  Superintendent  of  Banks,  and 
every  person,  firm,  corporation,  director,  agent,  officer,  or  member 
thereof  who  shall  violate  any  provision  of  this  section  directly  or  in- 
directly or  assent  to  such  violation  shall  be  guilty  of  a  misdemeanor. 

Paragraph  5.  For  the  purpose  of  carrying  out  the  provisions  of 
this  act  the  Superintendent  of  Banks  shall  have  power  to  appoint  a 
deputy  who  shall  within  fifteen  days  from  the  time  of  notice  of  his 
appointment  take  and  subscribe  the  constitutional  oath  of  office,  and 


APPENDICES.  125 

file  the  same  in  the  office  of  the  Secretary  of  State,  and  to  employ 
from  time  to  time  such  clerks  and  examiners  as  he  may  need  to  dis- 
charge in  a  proper  manner  the  duties  imposed  upon  him  by  this  act, 
and  he  shall  have  power  to  fix  the  compensation  of  said  deputy  and 
said  clerks  and  examiners  which  shall  be  paid  monthly  on  his  certifi- 
cate and  upon  the  warrant  of  the  comptroller  in  the  first  instance  out 
of  the  treasury.  All  of  the  expenses  incurred  in  the  administration 
of  this  section  of  the  banking  law,  including  the  salary  of  the  deputy, 
clerks  and  examiners  shall  be  charged  to  and  paid  by  the  persons, 
firms  and  corporations  engaged  in  the  business  specified  in  para- 
graph one  of  this  section,  in  like  manner  as  the  other  expenses  of  the 
banking  department  are  now  charged  to  and  paid  by  the  businesses, 
corporations  and  individuals  whose  activities  are  supervised  or  regu- 
lated by  said  banking  department. 

The  Superintendent  of  Banks  shall  fix  the  license  fee  to  be  paid 
by  any  person,  firm  or  corporation  who  shall  be  licensed  by  him  to 
engage  in  the  business  of  loaning  money  in  the  manner  set  forth  in 
this  section,  which  license  fee  need  not  be  uniform  throughout  the 
State.  This  license  fee  shall  be  paid  to  the  locality  in  which  such 
business  is  conducted.  The  fiscal  year  for  such  license  fee  shall  be  the 
calendar  year.  For  the  purpose  of  collecting  such  license  fee  the 
Superintendent  of  Banks  shall  certify  to  the  fiscal  officer  of  each 
locality  charged  with  the  collection  of  revenue  on  or  before  the  fif- 
teenth day  of  January  in  each  year  a  list  of  the  persons,  firms  and 
corporations  licensed  by  him  under  the  provisions  of  this  section. 
Every  person,  firm  and  corporation  licensed  under  this  section  shall 
file  with  the  Superintendent  of  Banks  on  or  before  the  first  day  of 
February  in  each  year  a  receipt  from  the  fiscal  officer  charged  with 
the  collection  of  revenue  in  the  locality  where  the  business  of  such 
person,  firm  or  corporation  is  licensed  snowing  that  the  license  fee  for 
the  fiscal  year  is  paid.  Failure  to  file  such  receipt  shall  be  a  viola- 
tion of  this  section.  For  the  fiscal  year  1908  such  list  shall  be  certified 
by  the  Superintendent  of  Banks  on  or  before  August  1,  1908,  and  a 
proportionate  part  of  any  sum  already  paid  as  a  license  fee  for  con- 
ducting a  business  of  loaning  money  under  the  conditions  prescribed 
by  paragraph  one  of  this  section  for  a  fiscal  year  which  extends  be- 
yond July  first  of  the  calendar  year  1908,  shall  be  credited  as  a  part 
payment  of  the  license  fee  certified  by  the  Superintendent  of  Banks 
for  the  six  months  of  the  fiscal  year  1908  beginning  July  1. 

Paragraph  6.  The  Superintendent  of  Banks  shall  upon  the  written 
request  of  the  official  head  of  the  legally  constituted  police  force  of 
the  locality  in  which  such  business  is  licensed,  authorize  by  written  cer- 
tificate such  members  of  the  local  police  force  as  he  may  consider 
proper  to  inspect  the  records  of  loans  made  by  any  person,  firm  or 
corporation  making  loans  upon  personal  property  deposited  with  the 
lender  as  set  forth  in  paragraph  one  of  this  section.  The  Superin- 
tendent of  Banks  shall  require  any  person,  firm  or  corporation  making 
loans  upon  personal  property  deposited  with  the  lender  as  set 
forth  in  paragraph  one  of  this  section  to  make  such  reports  daily  or 
otherwise  to  the  official  head  of  the  legally  constituted  police  force 
of  the  locality  in  which  such  business  is  licensed  as  said  head  police 
official  may  consider  proper  and  in  the  public  interest. 

Paragraph  7.  The  Superintendent  of  Banks  shall  report  annually 
in  his  report  to  the  legislature  such  facts  as  he  may  deem  proper  con- 
cerning the  business  specified  in  paragraph  one  of  this  section  together 
with  recommendations  for  any  additional  legislation  necessary  for  its 


126  SALARY  LOAN  BUSINESS  IN  NEW  YORK  CITY. 

proper  regulation  and  control  and  he  shall  include  in  said  annual  re- 
port copy  of  all  rules,  regulations  and  orders  issued  by  him  and  in 
force  applying  to  the  business  set  out  in  this  section. 

Paragraph  8.  All  acts  or  parts  of  acts  inconsistent  with  this  sec- 
tion of  the  banking  law  are  hereby  repealed.  All  powers  and  duties 
relating  to  and  regulating  the  business  of  loaning  money  on  the  secur- 
ity of  personal  property  deposited  with  the  lender,  a  transaction  com- 
monly Known  as  puwnbroking;  and  upon  personal  property  remaining 
in  the  possession  of  the  borrower,  a  transaction  commonly  known  as 
a  chattel  mortgage;  and  upon  the  security  by  an  assignment  of  sal- 
ary or  wages  either  earned  or  to  be  earned,  a  transaction  commonly 
known  as  a  salary  loan,  heretofore  conferred  upon  any  municipal  or 
county  authorities  by  the  provisions  of  any  general  law,  or  of  any 
special  law,  are  hereby  repealed. 

Paragraph  9.  This  act  shall  take  effect  immediately. 


APPENDICES.  127 


VITA 

The  author  was  born  in  Black  Hawk  County,  Iowa,  Oct.  23, 
1877.  He  attended  the  Iowa  State  Normal  School  at  Cedar 
Falls,  Iowa,  four  years,  graduating  with  the  degree  of  Master  of 
Didactics  in  1900.  He  taught  in  the  public  schools  of  Hudson, 
Iowa,  one  year.  Hie  attended  the  State  University  of  Iowa,  do- 
ing special  work  in  Political  Economy  and  Sociology,  and  receiv- 
ed the  degree  of  Bachelor  of  Philosophy  in  1903  and  the  degree 
of  Master  of  Arts  in  1904.  He  held  a  Scholarship  in  Economics 
for  the  year  1903-04,  and  a  Fellowship  in  Economics  for  the 
year  1904-05,  in  the  School  of  Political  and  Social  Science  at 
the  State  University  of  Iowa.  He  was  appointed  Instructor 
in  Economics  and  Sociology  in  the  University  of  Iowa  in  1905. 
In  May,  1907  he  was  appointed  to  a  Research  Fellowship  in 
the  New  York  School  of  Philanthropy. 


OF  THE     " 

UNIVERSITY 

OF 


RETURN  TO  the  circulation  desk  of  any 
University  of  California  Library 

or  to  the 

NORTHERN  REGIONAL  LIBRARY  FACILITY 
Bldg.  400,  Richmond  Field  Station 
University  of  California 
Richmond,  CA  94804-4698 

ALL  BOOKS  MAY  BE  RECALLED  AFTER  7  DAYS 

•  2-month  loans  may  be  renewed  by  calling 
(510)642-6753 

•  1-year  loans  may  be  recharged  by  bringing 
books  to  NRLF 

•  Renewals  and  recharges  may  be  made 
4  days  prior  to  due  date 

DUE  AS  STAMPED  BELOW 

JAM  1  7  2003 


DD20  15M  4-02 


